Completing the Accounting Cycle

November 14, 2024
Delita Krauze
UB62375BFO71432

Adjusting Entries and Trial Balance in Accounting

The document outlines the process of preparing adjusted trial balances in accounting, emphasizing the importance of making adjustments to accurately reflect revenues and expenses in the correct periods. It discusses various types of adjustments, their impact on financial statements, and the necessity for accurate reporting in financial management.

View Author Profile
Browse other Publications by this Author
106174405-1570711107124gettyimages-1083841638
Access Related Topics on AIU Live Classes, Cources, Publications, etc

Publication:

Assignment Transcript
AvatarLogo

CopyIcon

The document provides an in-depth exploration of the process of preparing adjusted trial balances in accounting, focusing on the significance of adjustments to ensure accurate financial reporting. It begins by explaining that all transactions are initially recorded in journals, leading to the compilation of a pre-adjusted trial balance. This pre-adjusted balance reflects the unadjusted financial position of a business.

Adjustments are crucial as they align revenues and expenses with the appropriate accounting periods, adhering to the revenue principle and the matching principle. The revenue principle states that revenue should be recognized when earned, while the matching principle requires that expenses incurred to generate that revenue be recorded in the same period. The document highlights that adjustments are necessary to ensure that financial statements present a true and fair view of the company’s financial position.

Common types of adjustments discussed include unearned revenues, accrued revenues, prepaid expenses, and accrued expenses. For instance, unearned revenue is recorded when cash is received before services are rendered, and it is later adjusted to revenue once the service is provided. The document also provides examples of adjusting journal entries, illustrating how these adjustments affect the accounting equation and the overall financial statements.

Furthermore, the document emphasizes the importance of compiling a post-adjusted trial balance after all adjustments have been made. This post-adjusted trial balance serves as the foundation for generating financial reports, such as income statements and balance sheets, which are essential for stakeholders to make informed decisions.

In conclusion, the document underscores that accurate adjustments are vital for reliable financial reporting, ensuring that all income, expenses, assets, and liabilities are appropriately recognized and valued, thereby enhancing the integrity of financial statements.

Atlantic International University

Get to know the AIU experience

Contact Us Today!

We understand how busy adults do not have time to go back to school. Now, it’s possible to earn your degree in the comfort of your own home and still have time for yourself and your family. The Admissions office is here to help you, for additional information or to see if you qualify for admissions please contact us. If you are ready to apply please submit your Online Application and paste your resume and any additional comments/questions in the area provided.

Pioneer Plaza
900 Fort Street Mall 905
Honolulu, HI 96813

800-993-0066 (Toll Free in US)
808-924-9567 (Internationally)
808-947-2488 (Fax)

AIU Success Stories

Contact Us Today!

Begin Your Journey!
AIU’s Summer of Innovation and Growth gives you the ability to earn up to $5000 in tuition credit by completing free lessons and courses.
Whether you’re looking to acquire new skills, advance your career, or simply explore new interests, AIU is your gateway to a world of opportunities. With free access to 3400 lessons and hundreds of courses the ability to earn credits and earn certificates there’s no better time to start learning.
Join us today as a Guest Student and take the first step towards a brighter, more empowered future.
Explore. Learn. Achieve.

Degrees

Let us know your goals and aspirations so we can chart a path at AIU to achieve them!
//
Admissions Counselor
Juan Mejia
Available
//
Admissions Counselor
Ariadna Romero
Available
//
Admissions Counselor
Rene Cordon
Available
//
Admissions Counselor
Sandra Garcia-Fierro
Available