Adjusting Entries: A Complete Beginner’s Learning Hub
Learn adjusting entries step by step, including accruals, deferrals, depreciation, supplies, bad debts, accrued revenue, accrued expenses, prepaid expenses, and unearned revenue. This hub explains why adjustments are required and how they prepare accounts for accurate financial statements.
Adjusting Entries Learning Path
Follow this order to understand why adjustments are needed and how period-end balances are updated.
Understand the Purpose
Learn why some revenues and expenses are not fully recorded before the accounting period ends.
What Are Adjusting Entries? →Identify the Adjustment
Determine whether the item is an accrual, deferral, estimate, depreciation, or another period-end update.
Explore Types of Adjustments →Prepare the Entry
Select the correct accounts, apply debit and credit rules, and record the required amount.
Prepare Adjusting Entries →Update the Trial Balance
Post the adjustments and prepare an adjusted trial balance for financial statement preparation.
Study the Adjusted Trial Balance →The Adjusting Entry Process
Each period-end adjustment can be completed through four connected steps.
Review
Review source documents, contracts, schedules, account balances, and period-end information.
Measure
Calculate the amount earned, incurred, expired, used, estimated, or deferred during the period.
Record
Prepare the adjusting journal entry using the correct debit and credit accounts.
Verify
Post the entry, review the updated balances, and prepare the adjusted trial balance.
Explore Adjusting Entry Topics
Use these guides to understand the main adjustment types and how each one affects the accounts.
What Are Adjusting Entries?
Learn what adjusting entries are and why they are required before preparing financial statements.
Read the Complete Guide →Types of Adjusting Entries
Understand accruals, deferrals, depreciation, estimates, supplies, and other adjustment categories.
Explore Adjustment Types →Accrued Revenue
Learn how earned revenue and receivables are recognized before cash is collected.
Study Accrued Revenue Entries →Accrued Expenses
Understand how incurred expenses and related liabilities are recorded before payment.
Study Accrued Expense Entries →Prepaid Expenses
Learn how prepaid assets are reduced and expenses are recognized as benefits are used.
Explore Prepaid Expense Adjustments →Unearned Revenue
Understand how customer advances are reduced as the related revenue becomes earned.
Explore Unearned Revenue Adjustments →Depreciation Adjusting Entry
Learn how depreciation expense and accumulated depreciation are recorded at period-end.
Study Depreciation Adjustments →Supplies Adjusting Entry
Understand how supplies used during the period are transferred from an asset to an expense.
Explore Supplies Adjustments →Bad Debt Adjusting Entry
Learn how estimated credit losses are recorded using bad debt expense and an allowance account.
Study Bad Debt Adjustments →Accrued Interest Entry
Understand how interest expense, interest payable, interest revenue, and receivables are recognized.
Explore Interest Adjustments →Accrued Payroll Entry
Learn how wages, salaries, payroll taxes, and related liabilities are accrued at period-end.
Explore Payroll Adjustments →Prepaid Insurance Entry
Understand how expired insurance coverage is transferred from prepaid insurance to insurance expense.
Study Insurance Adjustments →Adjusting Entry Examples
Review complete examples showing account analysis, calculations, journal entries, and updated balances.
View Worked Examples →Adjusting vs Closing Entries
Learn the difference between updating account balances and closing temporary accounts.
Compare Adjusting and Closing Entries →Adjusted Trial Balance
Understand how the updated account balances are organized after all adjusting entries are posted.
Explore the Adjusted Trial Balance →Adjusting Entry Practice
Practice identifying adjustments, calculating amounts, and preparing complete entries.
Start Practicing →Match Revenues and Expenses to the Correct Period
Adjusting entries ensure that earned revenue and incurred expenses are reported in the correct accounting period. They update incomplete account balances before the adjusted trial balance and financial statements are prepared.
Featured Adjusting Entries Guides
These guides are selected automatically from the Adjusting Entries category.
Latest Adjusting Entries Articles
The newest articles carrying the Adjusting Entries label appear here automatically.
Frequently Asked Questions About Adjusting Entries
What are adjusting entries?
Adjusting entries are period-end journal entries used to update revenue, expense, asset, and liability balances before financial statements are prepared.
Why are adjusting entries necessary?
They ensure that revenues are recognized when earned and expenses are recognized when incurred, even when the related cash movement occurs in another period.
What are the main types of adjusting entries?
Common types include accrued revenue, accrued expenses, prepaid expenses, unearned revenue, depreciation, supplies used, and estimated bad debts.
Do adjusting entries always involve cash?
No. The cash account is generally not used in an adjusting entry because the related cash transaction has already occurred or will occur in another period.
What comes after adjusting entries?
After the entries are posted, the business prepares an adjusted trial balance and uses the updated balances to prepare financial statements.
Continue Your Accounting Learning Path
After mastering period-end adjustments, continue with the accounting cycle to see how journal entries, ledger posting, trial balances, adjustments, financial statements, and closing entries work together.
Continue to Accounting Cycle