Adjusting Journal Entries Must Be Journalized And Posted

Adjusting Journal Entries must be Journalized and Posted before Financial Statements are prepared so that the account balances show the correct, true and updated figures in financial statements, in which users of accounting information are interested to take economic decisions. This step is necessary to reflect true & accurate accounting information for those accounts that require adjustments. Accounts that require adjusting entries are prepaid expense accounts, accrued expense accounts, accrued revenues, unearned revenues, depreciation, allowance for doubtful accounts, etc.

Adjusting entries include atleast one Income Statement Account and one Balance Sheet Account to reflect the correct, true and upto date balances of accounts.