Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Find a Job
  • Home
  • Accounting, Taxation, and Reporting
  • Managerial & Financial Accounting & Reporting

Accounting Adjustments - Explained

What are Accounting Adjustments?

Written by Jason Gordon

Updated at April 7th, 2022

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What are Accounting Adjustments? How Do Accounting Adjustments Work? 

What are Accounting Adjustments? 

An accounting adjustments are journal entries. More specifically, they are things entries that I can postpone doing the journal entry for (or maybe doing a whole bunch of journal entries for) until the very end of the year. Just do one giant journal entry at the very end.

Typically, when we do anything in accounting that deals with cash, we journalize it at that time. If we pay for something, we do a journal entry right then. Adjustments are a little different.


Back to: Accounting & Taxation

How Do Accounting Adjustments Work? 

Adjustments are made at the end of the period. If you're dealing with a normal calendar year, they happen on December 31st. There may be things that happen monthly and instead of doing one adjustment each month, you just do one at the very end. This is possible only because cash hasn't been affected yet or  you don't know about it until the very end. 

The journal entry affects one or more income statement accounts and one or more balance sheet accounts. So, if you write down the letters "r-e-a-l" and then split that word right down the middle. 

This acronym is a good representation of how adjustments work because one side of the equation (whether it be debit or credit doesn't matter) is going to be revenue or expense. The other side of the equation is going to be assets or liabilities. 

Note: You won't have two assets in this. It'll be one is going to be revenue expenses, the other one is going to be assets or liability. 

For different types of adjusting entries, there are four different things that generally give rise to accounting adjustments:

  • Deferred Expense
  • Deferred Revenue
  • Accrued Expense
  • Accrued Revenue

Related Topics

  • What is the Accounting Cycle? – Financial Accounting
  • Accrual vs Cash Basis Accounting – Financial Accounting
  • What are Accounting Adjustments? – Financial Accounting
  • What is an Adjusted Trial Balance – Financial Accounting
  • Completing the Accounting Cycle - Creating Financial Statements
  • What is the Trial Balance Closing Process – Financial Accounting
  • Example of the Closing Process
accounting adjustments accounting adjustment

Was this article helpful?

Yes
No

Related Articles

  • Pro Forma - Explained
  • Accounts Payable Subsidiary Ledger - Explained
  • Absorption Variance - Explained
  • After Tax Profit Margin - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand