Adjusting Accounting Entries Essay

I micturate been claimed by my supervisor to mentor a unfermented discovering clerk in my department, I am hoping that when Im through with(p) mentoring this person that they give take cargon accounting better. I am like bracing hoping that my supervisor will be regal of me, and continue asking me to mentor new people, and hopefully give me a shake or a promotion.To better register accounting we need to have why adjusting entries are so important to a business. Adjusting journal entries are make at the end of distributively closing pointedness to adjust the account balances. Most of the time, this is demand in order to achieve a clean cut-off at the end of the accounting period, and to ensure the accounts are complete, and accurate. Current account balances may non represent cryst completelyise balances, because some mistakes were identified in the post horse of transactions, and/or the accounting records are non updated to reflect new transactions or amount chang es in previous transactions. Examples would imply amounts that were affix to the wrong accounts, and timing differences in recognizing revenues and expenses between the accrual and the cash primer coat of accounting. (Adjusting JE, 2010) Adjusting entries can be either episodic or permanent. If the introduction is temporary at some point the adjusting entry will be reversed or other adjusting entry will be made to the account.See more(prenominal) Is the Importance of universe earnest a satirical looseness essayI will know explain the four types of adjusting entries ,as well as give an example of separately entry from the manufacturing industry.Accrued revenues (also called accrue assets) are revenues already earned but not notwithstanding gainful by the ruleer or posted to the general ledger. An example of accrued revenue would be for a habitude ordered machine that has been shipped FOB merchant marine point on the day the accounts receivable module is closed and the approval to bank bill the customer has not been received by the billing clerk. An adjusting entry would be preserve to recognize the revenue in the train period. This entry will reverse when the customer is appropriately invoiced. * Accrued receipts 14,000* tax 14,000 Unearned revenues (or deferred revenues) are revenues received in cash and recorded as liabilities introductory to being earned. Unearned revenue is a liability to the entity until the revenue is earned. An example of honorary revenue would be if the customer paid a furbish up for a custom ordered machine that has not been delivered, the deposit would be recorded as honorary revenue. This type of adjusting entry will be adjusted by another entry. * Revenue 14,000* Deferred Revenue 14,000 Accrued expenses (also called accrued liabilities) are expenses already incurred but not in time paid or recorded. Examples of these types of adjusting entries could be for paysheet that has been earned by employees on the weather day of the period but not paid until the next payroll date. These types of entries in general reverse the next month. * Salaries outgo 89,000* Salaries payable 89,000Prepaid expenses (or deferred expenses) are expenses paid in cash and recorded as assets foregoing to being used. The most common comprise of an adjusting entry for prepaid expense would be for the used portion of an insurance reward these types of adjusting entries are usually permanent. * Insurance Expense 1,000* Prepaid Insurance 1,000 Other adjusting entries admit depreciation of fixed assets, allowances for bad debts, and stocktaking adjustments. * Bad Debt Expense 50 * registration for Bad debt 50 (Adjusting EN, 2010)It is also wise to know how these entries are recorded in a computerized accounting system, since everything is now done by computers. At the end of each closing period, usually monthly, a perfect synopsis of the trial balance is per underframeed. This analysis include performance budget to factual and month to month to ensure all of the accounts are correctly stated. When an adjusting entry is identified, a journal entry input form is prepared. This form should be supported with offset documents that justify the entry and reviewed and approved by the appropriate level of accounting management. formerly the approval has been obtained, the journal entry is distinguish into the general ledger system as either a standard or self-reversing journal entry. The journal entry is than posted to the general ledger.There is also honorable issues that can arise if these entries are not posted correctly, Adjusting journal entries are a good way for management to misrepresent financial results by either accruing more revenue or expenses than appropriate, and for fraudsters to hide skimming, which is the misappropriation of cash. It is extremely important to understand that each adjusting journal entry must be fully supported and approved.If you have any(prenominal) qu estions about what I have explained to you satisfy dont hesitate to ask me anything, I am here to service of process you succeed in this business, and in this firm.