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Business Definition for: adjusting journal entry
adjusting journal entry
- necessary entry at the end of the reporting period to record unrecognized revenue and expenses applicable to that period. It is required when a transaction is begun in one accounting period and concluded in a later one. An adjusting entry always involves an income statement account revenue or expense) and a balance sheet account (asset or liability). The four basic types of adjusting entries relate to accrued expenses , accrued revenue , prepaid expense , and unearned revenue .
- correcting entry required at the end of the accounting period due to a mistake made in the accounting records; also called correcting entry. For example, if during the same year land was charged instead of travel expense, the correcting entry is to debit travel expense and credit land.
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