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Accounting All-in-One For Dummies
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Accounting All-in-One For Dummies

by Ken Boyd, Lita Epstein, Mark P. Holtzman, Frimette Kass-shraibman, Maire Loughran, Vijay S. Sampath, John A. Tracy, Tage C. Tracy, Jill Gilbert Welytok
March 2014
Beginner to intermediate
744 pages
18h 7m
English
For Dummies
Content preview from Accounting All-in-One For Dummies

Chapter 6

Adjusting the Books

In This Chapter

arrow Going over types of accounting adjustments

arrow Making adjustments for noncash transactions

arrow Taking your adjustments for a trial (balance) run

During an accounting period, your bookkeeping duties focus on your business's day-to-day transactions. When the time comes to report transactions in financial statements, you must make some adjustments to your books. Your financial reports are supposed to report your company's financial condition, so your books must reflect any significant change in the value of your assets, even if that change doesn't involve the exchange of cash. Those changes are adjustments.

If you use cash-basis accounting, many adjustments aren't necessary because you record transactions only when cash changes hands. (See Book I, Chapter 4 to find out more about the two accounting methods: accrual and cash-basis.)

This chapter reviews the types of adjustments you need to make to the books before preparing financial statements. Adjustments include calculating asset depreciation, dividing prepaid expenses, updating inventory numbers, dealing with bad debt, and recognizing salaries and wages not yet paid.

Adjusting All the Right ...

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ISBN: 9781118813652Purchase book