Adjusting
entries are journal entries made at the end of the accounting period that
adjust the general leadger accounts to more accurately state the revenues and expenses
or the income statement for the period and the assets and liabilities on the
balance sheet at the end of the period.
According to
weygandt, kieso and kimmel, “Adjustig entries are entries made at the end of an
accounting period to ensure that companies follow the revenue recognition and
matching principles”.
According to
pyle and Larson, “Adjusting entries are journal entries made to assign revenues
to the period in which earned and to match revenues and essences.
In summary,
adjusting entries are entries required at the end of each accounting period to
recognize, on an accrual basis, revenues and expensses for the period and to
report proper amount for asset, liability and owner’s equity accounts.