What Are Adjusting Entries?


Quick Answer

Adjusting entries are entries made in accounting journals at the end of reporting periods, usually to indicate money that has been earned or expenses that have accrued but not been entered into financial reports. Accountants use these entries to ensure that revenue and expenditures match during each recording period.

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Full Answer

Examples of income and expenses that adjusting entries are commonly used for include interest on loan payments, billing credits, unpaid invoices, earned interest on investments and payments divided between two billing periods. Accountants also use adjusting entries to reconcile accounting errors.

Accountants often refer to adjusting entries as balance day adjustments or correcting entries.

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