An adjusting entry is an accounting journal entry made at the end of an accounting period to update account balances to accurately reflect the financial position of a business. This process ensures that revenues and expenses are recognized in the period in which they occur, adhering to the accrual basis of accounting. Adjusting entries are crucial for preparing accurate financial statements, as they account for items such as accrued revenues, accrued expenses, deferred revenues, and deferred expenses.
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