Adjustment Journal, Crucial Things In The Process Of Making Financial Statements

Adjustment Journal, Crucial Things In The Process Of Making Financial Statements

Accounting or accounting does have an important role in the sustainability of a company or line of business. Responsible for ensuring the company has taken care of all financial needs. Like taxation and financial reports, the accounting profession should not be underestimated. The reason is, if an accountant makes a miscalculation or mistakes in entering financial data, the final results of the financial statements will be inaccurate and not credible. This also does not rule out that errors in the contents of financial statements can make the company’s performance not optimal. Usually, the process of making adjusting journals is carried out after making a trial balance and when the working paper has not been prepared. It is important to make an adjusting journal with Irena’s Bookkeeping in preparing financial statements for several reasons.

One of them is updating or updating several accounts in the ledger. This then becomes an accrual-based accounting principle, or financial records when money is collected and received. In general, adjusting entries are prepared so that the accountant can determine the balance in the account records at the end of the ledger preparation period. Accountants can also calculate accurate income and expenses by keeping an adjusting journal for the period. Adjusting journals have a fairly important function in making financial reports and need to be prepared by an accountant. There are several accounts in the financial statements or ledgers that make adjusting entries need to be prepared at the manufacturing stage.

Each of these accounts has varied backgrounds that require an accountant to prepare an adjusting entry. The first account that requires an adjusting journal is the equipment account. The adjusting journal needs to be prepared in the equipment account because there is a usage report in that account. The equipment referred to in this account is materials or goods purchased for the company’s operations. It is necessary to make adjustments to the income account because there is income that has not been calculated. Adjusting entries are also required in this account because there are revenues that may not yet be the company’s profit, such as revenue receivables. The nominal money or income that will still be received and has become the right of the company is what needs to be adjusted in the adjusting journal.