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Adjusting entries are a type of journal which consolidates accounting records at the end of an accounting period using the accrual method. With this method, revenues and expenses are recognized when incurred, not when paid for. This consolidation is necessary due to deferred revenues and expenses which may arise. For example, if equipment is purchased which will not be […]
Reversing entries are journal entries intended to reverse specific accrual-based adjusting entries. As mentioned prior, accrual-based accounts must be adjusted at the end of an accounting period because of the intrinsic nature of accrual-based transactions. Accrual revenues or expenses are not reported when cash is exchanged, but whenever the transactions occur. Because revenues and expenses may be reported in […]
General journals, or books of original entry, record financial transactions. These journals utilize double entry bookkeeping, meaning that accounts are debited and credited with the same amount across accounts in order of date. Historically, financial information was hand-written into a variety of journals such as sales journals, purchases journals, cash disbursements journals, and cash receipts journals. Now, financial information […]
Specialized journals are used alongside general journals to record and post a business’s most frequent financial transactions. Instead of recording all information to the general journal, specialized journals are utilized for time and efficiency’s sake. Because a specialized journal records the most frequent transactions, the types of specialized journals vary by business. However, common types include revenue and […]