Adjusting entries is additional accounting information recorded at the end of the accounting period to accurately match revenues with expenses and the main element in accrual-basis accounting. The accrual basis refers to revenues or expenses which are recognised in the current period irrespective of whether cash has been received. It is different from cash basis accounting, where revenues or expenses are only recognised when they involve cash receipts payments.
They are important to be account because it will affect at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). After the adjustments, the accounts in the trial balance will show the updated balances, which will then be used to prepare the financial statements.
Adjusting entries divided to prepaid expenses,depreciation expenses; unearned revenue, accrued expenses, and accrued revenue.
They are important to be account because it will affect at least one income statement account (revenue or expense) and one balance sheet account (asset or liability). After the adjustments, the accounts in the trial balance will show the updated balances, which will then be used to prepare the financial statements.
Adjusting entries divided to prepaid expenses,depreciation expenses; unearned revenue, accrued expenses, and accrued revenue.