Adjusting Accounting Entries Essay

I have been asked by my supervisor to mentor a new invoice clerk in my department, I am hoping that when Im take for grantede mentoring this person that they bequeath discover accounting better. I am also hoping that my supervisor will be proud of me, and continue asking me to mentor new people, and hopefully flag me a raise or a promotion.To better find out accounting we need to retire why adjusting entries ar so important to a business. Adjusting journal entries are made at the end of each termination period to adjust the account balances. Most of the time, this is necessary in nightspot to achieve a clean cut-off at the end of the accounting period, and to check into the accounts are complete, and accurate. Current account balances may non represent countervail balances, because some mistakes were identified in the posting of transactions, and/or the accounting records are not updated to reflect new transactions or amount changes in previous transactions. Examples wo uld let in amounts that were post to the wrong accounts, and timing differences in recognizing revenues and expenses among the accrual and the immediate payment basis of accounting. (Adjusting JE, 2010) Adjusting entries can be either jury-rigged or permanent. If the accounting first appearance is temporary at some point the adjusting main course will be reversed or another adjusting entry will be made to the account.See more Is the Importance of being serious a satirical play essayI will k straight explain the four types of adjusting entries ,as well as give an example of each entry from the manufacturing industry.Accrued revenues (also c in alled accrued assets) are revenues already earned alone not yet paid by the consumptioner or posted to the general ledger. An example of accrued revenue would be for a use of intelligents and services ordered machine that has been shipped FOB shipping point on the solar day the accounts receivable module is closed and the commend ation to bill the client has not been reliable by the billing clerk. An adjusting entry would be recorded to espy the revenue in the correct period. This entry will reverse when the customer is appropriately invoiced. * Accrued Revenue 14,000* Revenue 14,000 unearned revenues (or deferred revenues) are revenues received in cash and recorded as liabilities prior to being earned. Unearned revenue is a liability to the entity until the revenue is earned. An example of unearned revenue would be if the customer paid a deposit for a custom ordered machine that has not been delivered, the deposit would be recorded as unearned 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 only not yet paid or recorded. Examples of these types of adjusting entries could be for payroll department that has been earned by employees on the last day of the perio d but not paid until the neighboring payroll date. These types of entries generally reverse the next month. * Salaries Expense 89,000* Salaries Payable 89,000Prepaid expenses (or deferred expenses) are expenses paid in cash and recorded as assets prior to being used. The most common nisus of an adjusting entry for prepaid expense would be for the used portion of an damages premium these types of adjusting entries are unremarkably permanent. * amends Expense 1,000* Prepaid Insurance 1,000 Other adjusting entries include depreciation of fixed assets, allowances for bad debts, and inventory adjustments. * rugged Debt Expense 50 * Allowance for Bad debt 50 (Adjusting EN, 2010)It is also quick of scent 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 thorough analysis of the trial balance is performed. This analysis include performance budget to actual and mo nth to month to ensure all of the accounts are correctly stated. When an adjusting entry is identified, a journal entry foreplay form is prepared. This form should be back up with source documents that justify the entry and reviewed and approved by the appropriate level of accounting management. Once the approval has been obtained, the journal entry is keyed 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 ethical issues that can nobble if these entries are not posted correctly, Adjusting journal entries are a good way for management to manipulate 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 questions about what I have explained to you please dont hesitate to ask me anything, I am here to back up you succeed in this business, and in this firm.