Financial Accounting › Adjusting & Closing Entries
What are adjusting entries and why are they needed?
BeginnerAnswer
End-of-period journal entries (accruals, prepayments, depreciation, provisions) that bring accounts to their correct balances under the accruals concept before preparing statements.
Dr Depreciation 1,000 / Cr Accumulated Depreciation 1,000Real-world example Without adjustments, profit would be based on cash timing, not economic reality.