rajkalyan

• Apr 14th, 2006

 

Current account balances may not represent correct balances due to following reasons:
      a. Company made mistakes in preparing journal entries in the past.
      b. Accounting records are not updated to reflect new transactions or amount changes in previous transactions. 

Adjusting journal entries are usually prepared at the end of an accounting period to update account balances to reflect correct balances as of the balance sheet date (the date at the end of an accounting period).

    The timing differences in recognizing revenues and expenses between accrual basis and cash basis accounting are frequently corrected by adjusting journal entries.

Ye

• Nov 18th, 2006

 

Adjusting entry need every end of month & end of year because The match priciple of accounting, that means expense have to match revenue,means the expenses or revenue has been occur but have not record need to be adjusted.Like wages accrual the last few days of the month, but paid on next month; also, interest accrual the interest has been occour but not record yet.