Every closing of the accounting year, companies must correctly attribute those income, expenses, assets and liabilities that correspond to the year. Getting this done through the appropriate measures is what is called an accounting adjustment. This economic term It is essential for the management of the accounting of any company.
How is the accounting adjustment made?
The accounting adjustment is carried out through a series of corrections that allow the accounting result to be exact. Among the elements that most influence the accounting adjustment, income and expenses stand out, since in many cases there are expenses or income that at the end of the year that have not been counted or that correspond to other years. That is why it is necessary to make the necessary corrections and adjustments to account for those income and expenses correctly and for the accounting result to match.
However, these accounting adjustments should not be confused with off-the-books adjustments, since the latter correcting expenses and income at the fiscal level.
Examples of accounting adjustment
There are a wide variety of accounting adjustments that can be made to close the fiscal year correctly. Among the most common types of accounting adjustments we find:
- Checking sums and balances
- Adjust the depreciation of fixed assets
- Reclassify long-term debts to short-term
- Adapt assets to impairment
- Allocate all provisions
- Regulate stocks
- Periodify expenses and income
- Post corporation tax
- Control the distribution of expenses and income in several years
- Adjust anticipated income and expenses
Therefore, it is important that before closing the accounting annual company review of supplier invoices, outstanding delivery notes, periodic invoices or documentation of the tax return, monthly payroll summaries and statements paid to Social Security.