Adjusting Entry

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Adjusting Entry

 

(Russian, storno, from Italian storno, bookkeeping transfer), a bookkeeping procedure generally intended to rectify an incorrect entry.

Only one kind of adjusting entry is customarily used—the reversing entry, a supplementary entry in which the same absolute number is kept but the sign is reversed, in order to correct an error. The incorrect entry is thus canceled. The numbers reversed are usually written in red ink so that they will stand out; thus, reversing entries are sometimes known as red-ink entries. A partial adjusting entry can also be used; here, the original error is not canceled but merely altered.

In making an adjusting entry, it is necessary that reference be made to the entries being corrected or adjusted.

References in periodicals archive ?
Two of the most commonly difficult subjects are the financial statements and their accounts and the introduction of accrual basis accounting and adjusting entries.
Adjusting entries are the final step in accrual accounting.
G/L Tie-Out Manager -- ensures that all reconciliation documents tie out to final general ledger balances; alerts finance executives to top level, fraudulent, and erroneous late adjusting entries.
The accounting errors relate to certain adjusting entries pertaining to the reconciliation process for inventories, accounts payable and work-in-process.
Proposing adjusting entries, provided that the client reviews the entries and the member is satisfied that management understands the nature of the proposed entries and the impact the entries have on the financial statements.
At year-end, the return preparer made adjusting entries to reclassify the loans as running to and from the shareholders.
Have there been significant adjusting entries that have increased the inventory balance?
However, at year end, when preparing the trial balance along with the closing and adjusting entries, an accountant may discover other errors.
This is a result of increased sales and cost reductions and year end adjusting entries which have further reduced expenses.
In light of the restatement of financial statements for the full year 2004 and the first and second quarters of 2005, the Corporation will make other adjusting entries to move the recordation of unrelated items from the first quarter of 2005 to 2004.
In addition, students discuss in class how they will present the adjusting entries and the resulting financial statements to Hydromaint's owners/engineers and bookkeeper and are continually reminded of their responsibility to various users of financial information such as investors, creditors and suppliers.
The case study's staff accountant was too concerned with adjusting entries and not concerned enough about the apparent indication of fraud.