What is Adjusting Entry or Adjustment?

Adjusting entries are journal entries that are made at the end of the accounting period, to adjust expenses and revenues to the accounting period where they actually occurred. A common characteristic of an adjusting entry is that it will involve one income statement account and one balance sheet account. The purpose of each adjusting entry is to get both the income statement and the balance sheet to be accurate.

There are six basic types of adjusting entries:

• Accrued Revenues - It is also called receivable or collectible, accrued assets. This is used to record an income already earned by the business but not yet collected when the accounting period ends. You would debit accounts receivable and credit service revenue.

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