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What is adjusting entry?
The main purpose of adjusting entry is to match income and expenses to appropriate accounting period. They’re accounting journal entries that convert an organization’s accounting records to an accrual basis of accounting. Adjusting entries are usually made on the last day of an accounting period. Accounting period may be monthly, quarterly or yearly on the basis of requirement of a company to make decisions. Adjusting entry is prepared to find out the revenue and expenses incurred during the accounting period. An adjusting entry involves either income or an expense account.
Before we give you more reasons to go for our adjusting entry assignment help, let’s try to understand different types of adjusting entry.
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Types of adjusting entry:
- Accruals:
Revenue not yet received nor recorded and expenses not yet paid nor recorded in the books of accounts are accruals. For example, an advance payment made to a company for receiving goods and services. Now the amount is reported as an asset until the service is delivered. Once the product or service is delivered, an entry will be made to report the expenses and reduce the amount of asset.
- Prepayments:
Revenues received in advance and recorded as a liability. For example, prepaid rent or insurance, unearned revenue etc. Let’s say, a company paid 6 months of rent in advance but accounting period is only a month. In this case, 5 months of rent is already paid but there is no requirement to report it as an expense in the current income statement. After the end of 5 months, it can be reported as an expense already paid.
- Non-cash:
Recording non-cash items like depreciation expense, allowing for doubtful debts etc.
This subject is not as easy as it looks. Adjusting entry needs your patience, time and effort because it is difficult to understand the underlying concept. The reason is the vast area that it covers. This is why we offer our online services for adjusting entry assignment help to ease your burden and save your time.
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