Differences Between Reclass Entry And Adjusting Journal Entry

Reclass Entry is recorded when the amount of an Account is wrongly transferred to another account such as instead of debiting the office equipment account, the cash account is debited. Adjusting Entries are recorded at the end of the accounting period so that the Adjustments made to Different Types of Accounts are adjusted or updated according to Accrual Basis of Accounting.

The main or primary purpose of reclass entry is to correct the wrong classification of accounts by transferring the correct amount to the correct account while adjusting entries are prepared / recorded to update the closing balances of accounts for the current accounting period before transferring to Trial Balance and Financial Statements such as Income Statement and Balance Sheet.