To obtain accurate information about the company's financial situation, we must refer to the balance sheet, which is the result of the balances shown in the accounts at the end of the financial year.
The balances of these accounts are the product of the accounting entries, which make up the general ledger and in which all entries are reflected, including adjustment and closing entries.
An accounting entry is a note made in the cayman islands email list daily accounting book . It records economic events that cause a quantitative or qualitative change in the composition of a company's assets.
There are different types of accounting entries depending on their purpose or function. The different types of accounting entries record the entries that are made during the financial year or are used to open or close the financial year.
The types of accounting entries according to their function are:
In this article we focus on adjusting and closing entries , two types of entries that have in common only that they are made at the end of the financial year.
They are carried out at the end of the financial year in order to ensure that the accounting reflects a true image of the company . Their purpose is to update certain accounts before the accounting closes.
Some examples of these entries are adjustments in the value of inventory, accruals, amortizations, provisions, etc.
Accruals are accounting adjustments made to allocate or assign the corresponding income and expenses to each financial year, thus applying the accrual accounting principle. These entries distribute certain transactions between the affected accounting periods. In this way, accrued income or expenses corresponding to the financial year are recorded, but whose invoice or account charge is received after the closing date , generally December 31.
During the financial year, numerous income and expense transactions are recorded . However, at the closing date, one of the following circumstances may occur.
