Adjusting entry
In accounting, adjusting entry means a close entry to apply accrual accounting.
- Layer
- Lexicon
- Defined in
- Lexicon
- Components
- 1
Not a rule
Bookkeeping convention — not codified. US GAAP governs recognition, measurement and presentation — not the mechanics a bookkeeper uses to get there. Anyone citing a standard for this word is citing the wrong thing.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
The lesson that teaches this
Accounting, 0 to 1 — a free course taught end to end on one month of one company, with the spreadsheet exercises to work it yourself.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- correction
Components that render this
The concept is not documentation-only. These are the components that name it in their specification, grouped and stated exactly as the catalog states them.
Components that render the terms it depends on
Little in the catalog names this concept outright, but its definition is built out of others that are named. These render accrual, close.
6Statements
Family spec11Payables (AP)
Family spec12Close, controls & consolidation
Family spec13Metrics & analysis
Family specTerms this one depends on
Also in Close
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Depreciation scheduleStraight-line, declining balance or SYD, with the convention that decides the first period.Tool
- Lease — ASC 842 / IFRS 16PV of the payments at your IBR, the liability unwind and the ROU asset — straight-line for a finance lease, the plug to a level cost for an operating one.Tool
- Adjusting entry vs closing entryAdjusting entries are made at period-end to put revenue and expenses in the right period; closing entries are made at year-end to move the period's revenue and expense balances into retained earnings.Compare
- Journal entry for prepaid insuranceWhen the premium is paid, debit Prepaid insurance and credit Cash. At each month-end, debit Insurance expense and credit Prepaid insurance for the month's share of the policy, until the prepaid balance reaches zero.Entry
- Journal entry for prepaid rentWhen rent is paid in advance, debit Prepaid rent and credit Cash. At each month-end, debit Rent expense and credit Prepaid rent for the month the space was used.Entry
- Journal entry for a prepaid software subscriptionWhen an annual software subscription is paid up front, debit Prepaid software and credit Cash (or Accounts payable). Each month-end, debit Software expense and credit Prepaid software for the days of service used that month.Entry
- Journal entry for accrued expensesAt month-end, debit the expense and credit Accrued expenses for work received but not yet billed. Reverse the accrual on the first day of the next month, then book the vendor's bill as usual when it arrives.Entry
- Journal entry for accrued wagesAt month-end, debit Wages and salaries and credit Accrued wages for the days worked since the last payday. On payday, reverse the accrual or debit Accrued wages for the part of the payroll it covers.Entry
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.