Explain why adjusting entries are necessary

Hominids started using primitive stone tools millions of years ago. The earliest stone tools were little more than a fractured rock, but approximately 75, years ago, [24] pressure flaking provided a way to make much finer work. Control of fire by early humans The discovery and utilization of firea simple energy source with many profound uses, was a turning point in the technological evolution of humankind. As the Paleolithic era progressed, dwellings became more sophisticated and more elaborate; as early as ka, humans were constructing temporary wood huts.

Explain why adjusting entries are necessary

Businesses rely on their accountants to report accurate information. The owners and managers use this information to make decisions on behalf of the business. The accountant records financial transactions throughout the month as they occur. They receive documentation for each transaction, such as invoices or customer deposits.

Sometimes at the end of the month, they also record adjusting entries. Adjusting entries update the financial records for events that have occurred, but no document for a transaction exists. Adjusting Entries Adjusting entries bring the account balances current as of the last day of the month.

This means that events that have not been documented yet are recorded through these entries. An example of an adjusting entry includes recording wages for the last days of the month for which employees have not been paid yet.

Adjusting Entries | Types | Example | How to Record Explanation & Guide

Another example would be to record the electricity used through the end of the month even though a bill has not been received. Matching Concept The idea behind recording adjusting entries lies with the matching concept. The matching concept records the cost of doing business during the same business that the company earns the revenue.

The financial records then communicate the activities that occurred rather than the actual money that was transferred. These include providing services for customers and billing them later for the work or receiving inventory and paying for it the following month.

Explain why adjusting entries are necessary

Types of Adjustments There are two main types of adjustments. Accruals record revenues and expenses before any transaction gets recorded.

Adjusting Entries: Explain Why Adjusting Entries Are Necessary In Accounting

These include salaries owed to employees or income taxes owed to the government. Deferrals refer to revenues and expenses that relate to a prior transaction. For example, companies typically pay for an insurance policy several months in advance.

The accountant records this transaction as an asset because the company will receive the benefit of being insured for several months. At the end of each month, the accountant records a deferral to transfer a portion of the total insurance to an expense.

The owner can read through the financial statements knowing that everything that occurred during the month is reported even if the financial part of the transaction will occur later.

A financial statement prepared without considering adjusting entries would misrepresent the financial health of the company.[This is a repost of the Non-Libertarian FAQ (aka “Why I Hate Your Freedom”), which I wrote about five years ago and which used to be hosted on my website. DVD Frequently Asked Questions (and Answers) This is the June 27, revision of the official Internet DVD FAQ for the monstermanfilm.com Usenet newsgroups.

Technology can be viewed as an activity that forms or changes culture.

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Additionally, technology is the application of math, science, and the arts for the benefit of life as it is known. Explain why adjusting entries are necessary. Describe the 4 types of adjusting entries, and provide a manufacturing industry example of each. Describe how these entries would be recorded in a computerized accounting system.

Jul 09,  · Please explain why adjusting entries are necessary at the end of an accounting period. Describe, in order, the four basic steps in the closing process performed at the end of each accounting period.

Explain why the closing process is so important. The Temple. Within the temple the most important and sacred LDS ordinances are performed.

Regardless of a person's righteousness, without these ordinances, they cannot attain the highest degree of God's glory in the hereafter.

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