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 ?
An adjusting entry must be made (and the inventory detail adjusted) to write down the 700 units of Item A in ending inventory from the recorded unit value of $16 to the DMV of $15, as shown below:
31 Adjusting entry for market value of crop on hand (34) 6,000 6,000 Dec.
31 Adjusting entry for insurance paid in advance (37) 700 700 Income Statement: Cost and Market Operating Expenses: Insurance $(1,200) + Change in Prepaid Insurance 0 Net Effect on Net Farm Income, Accrual Adjusted $(1,200)
Using journal entries, they record the following adjusting entry before financial statements are prepared to report the Change in Investment in Growing Crops.
31 Adjusting entry for expenditures in orchard (38) 2,500 2,500 Dec.
31 Adjusting entry to record change in interest payable (40) 5,000 5,000 Dec.
Series 4 in Exhibit 2 shows how the Zeta bond rating would change after posting Batson's suggested adjusting entry to Enron's financial statements.
Why then should the recording of an adjusting entry arising from the audit be subject to a different test?
Recording an adjusting entry near the end of the process could involve hours of work.