The adjustment transactions represent such items of incomes and expenditures, which relate to the current year and have not yet been brought into the book of accounts. Such financial transactions are adjusted after the preparation of trial balance. The financial reporting information will not be accurate unless we take into consideration the adjustment entries. Adjusting entries allow the accountant to communicate a more accurate picture of the company's finances. One can read through the financial statements knowing that everything that occurred during the month is reported even if the financial part of the transaction will occur later. There are four types of accounts that will need to be adjusted. They are accrued revenues, accrued expenses, deferred revenues and deferred expenses. The presentation gives better understanding on the topic.

Saket Kumar

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