{"id":3079,"date":"2020-10-08T21:44:00","date_gmt":"2020-10-08T21:44:00","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&p=3079"},"modified":"2020-11-17T20:21:34","modified_gmt":"2020-11-17T20:21:34","slug":"introduction-to-the-adjusting-process","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/introduction-to-the-adjusting-process\/","title":{"raw":"Introduction to the Adjusting Process","rendered":"Introduction to the Adjusting Process"},"content":{"raw":"

What you'll learn to do:\u00a0Describe the process of making adjusting journal entries<\/h2>\r\n\"StepLet's review our accounting cycle again. The first three items represent our daily activities as a bookkeeper\u2014keeping the books (journal and ledger) up to date:\r\n
    \r\n \t
  1. Analyze Transactions<\/li>\r\n \t
  2. Prepare Journal Entries<\/li>\r\n \t
  3. Post Journal Entries<\/li>\r\n<\/ol>\r\nStep four (Prepare Unadjusted Trial Balance) is something we do monthly (or more often, if necessary) to ensure that everything is in order for step five: Make Adjusting Journal Entries. We may do this step monthly or quarterly, but almost always annually. The only reason we wouldn\u2019t create financial statements is if we were out of business, but even then we have to file a final tax return and we\u2019ll need financials to do that.\r\n
    \r\n

    The Accounting Cycle<\/h3>\r\n
      \r\n \t
    1. Analyze Transactions<\/li>\r\n \t
    2. Prepare Journal Entries<\/li>\r\n \t
    3. Post Journal Entries<\/li>\r\n \t
    4. Prepare Unadjusted Trial Balance<\/li>\r\n \t
    5. Make Adjusting Journal Entries<\/li>\r\n \t
    6. Prepare Adjusted Trial Balance<\/li>\r\n \t
    7. \u00a0Prepare Financial Statements<\/li>\r\n \t
    8. Prepare Closing Entries<\/li>\r\n \t
    9. Prepare Post-Closing Trial Balance<\/li>\r\n \t
    10. Create and Post Reversing Entries, if needed<\/li>\r\n<\/ol>\r\n<\/div>\r\nIn the last section, we took NeatNiks right up to the unadjusted trial balance at the end of the month of October. The next step for that company will be to systematically analyze the accounts one by one to determine which ones, if any, need to be adjusted before we compile our final October accrual-basis financial statements.","rendered":"

      What you’ll learn to do:\u00a0Describe the process of making adjusting journal entries<\/h2>\n

      \"StepLet’s review our accounting cycle again. The first three items represent our daily activities as a bookkeeper\u2014keeping the books (journal and ledger) up to date:<\/p>\n

        \n
      1. Analyze Transactions<\/li>\n
      2. Prepare Journal Entries<\/li>\n
      3. Post Journal Entries<\/li>\n<\/ol>\n

        Step four (Prepare Unadjusted Trial Balance) is something we do monthly (or more often, if necessary) to ensure that everything is in order for step five: Make Adjusting Journal Entries. We may do this step monthly or quarterly, but almost always annually. The only reason we wouldn\u2019t create financial statements is if we were out of business, but even then we have to file a final tax return and we\u2019ll need financials to do that.<\/p>\n

        \n

        The Accounting Cycle<\/h3>\n
          \n
        1. Analyze Transactions<\/li>\n
        2. Prepare Journal Entries<\/li>\n
        3. Post Journal Entries<\/li>\n
        4. Prepare Unadjusted Trial Balance<\/li>\n
        5. Make Adjusting Journal Entries<\/li>\n
        6. Prepare Adjusted Trial Balance<\/li>\n
        7. \u00a0Prepare Financial Statements<\/li>\n
        8. Prepare Closing Entries<\/li>\n
        9. Prepare Post-Closing Trial Balance<\/li>\n
        10. Create and Post Reversing Entries, if needed<\/li>\n<\/ol>\n<\/div>\n

          In the last section, we took NeatNiks right up to the unadjusted trial balance at the end of the month of October. The next step for that company will be to systematically analyze the accounts one by one to determine which ones, if any, need to be adjusted before we compile our final October accrual-basis financial statements.<\/p>\n\n\t\t\t

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          Candela Citations<\/h3>\n\t\t\t\t\t
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          CC licensed content, Original<\/div>