Differences Between Reclass Entry And Adjusting Journal Entry
Reclass Entry is recorded w he n t h e amount of an Account is wrongly transferred to anot h er account suc h as instead of deb iti ng t h e office equipment account, t h e cas h account or bank account is debited. Adjusting Entries are recorded at t he e nd of t he accou nting period so t hat the Adjustments made to Different Types of Accounts are adjusted or updated according to Accrual B asis of Accounting , so that you will get clear and correct information about accounts during the accounting period. The mai n or primary purpose of reclass entry is to correct t he wro ng classificatio n of accounts b y tra nsferring t h e correct amount to t h e correct account w hile adjusti ng entries are prepared / recorded to update t he closi ng b ala nces of accounts for the current accounting period b efore transferring to Trial Bala nce and Financial Statements such as Income Statement and Balance Sheet.