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Accounting
Adjusting Entries
Special journal entries made at the end of a period to update accounts so the financial statements show the true picture.
Adjusting entries handle things like accrued expenses, prepaid items, depreciation, and unearned revenue. Without them, the income statement and balance sheet would be wrong. They're done right before closing the books.It's like fixing your homework right before you turn it in so all the answers are accurate and up-to-date.
Real world: At the end of the month a company records that employees have earned two days of unpaid wages or that they used up some prepaid insurance.
💡 Adjusting entries are the secret sauce that makes accounting honest — they make sure you don't overstate profits or hide debts.