Importance Of Adjusting Industries Accounting Essay


This paper discusses about adjusting industries and the importance of adjusting industries to the manufacturing industry. It also describes the four types of adjusting industries and manufacturing industry for these adjusting industries. This paper details that how these industries would be recorded in a computerized accounting system. It also explains one ethical issue that could result from the preparation of these manufacturing entries. This paper concludes with these manufacturing industries by providing the supporting points that enhanced the accounting section of manufacturing industries.

Importance of adjusting industries

The adjusting entries were the journal entries that usually made at the end of accounting period for the allocation of income and expenditure to the period in that they actually occurred. The revenue recognition principle was the basis of marketing adjusting industries that pertained to unearned and accrued revenues under accrual basis accounting and the revenues, costs were recognized by the matching principle of accrual accounting in the same accounting period. The adjusting entries were necessary in order to achieve the clean cut-off at the end of accounting period and to ensure completed and accurate accounting to the manufacturing company.

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The current account balances of manufacturing company were not represented the correct balances and because the mistakes were identified in the posting of transactions. The adjusting entries of closing were needed for determining the correct value of gross profit and costs of goods sold. After passing these adjusting entries, closing stock will be gone to the credit side of trading account as well as the gross profit will be calculated in the accounting systems. These adjusting entries will also be used to the determination go correct value of net profit, fixed asset, and financial position. The correct company payable to third party was shown by making these adjusting entries. The third party’s accounting can be implemented by these adjusting entries.

The net profit loss and financial position can also be recognized by these adjusting entries in same accounting period in financial organization. Making adjusting entry of advance expense was also necessary for influencing the final account and these entries will be helpful to earn the revenues to the accounting period. These entries will show the perfect amount payable and correct expenses to the third party in financial and accounting organization and hence these were necessary for accounting (John D. Bazley, 2009).

Types of adjusting entries

Accrued revenues

This was the type of adjusting revenues that was otherwise called as the revenues but not paid by the customers to the general ledger. For example, in machine manufacturing company, machine for goods that have been sold but that had not been billed and but the custom machines were shipped and during the same time the receivable module of custom machine were closed. The billing for the custom machine had not received by the billing clerk in custom machine manufacturing company.

Unearned revenue

This revenue was the type of adjusting entry that also influenced the manufacturing company. When an individual system manufacturing company was received the money for a service that had yet to be fulfilled. This revenue also thought of as a prepayment for services that this system manufacturing company was expected to produce for the purchaser. After the result of system prepayment, the system seller had a liability to the revenue eared until delivering of system products.

Accrued expenses

This was the type of adjusting entries to accrue expenses that was necessary when there are unrecorded expenses and liabilities that applied for a given accounting duration in advertisement organization. These expenses included wages for to the performance of the work in the current accounting period and but it was not paid until the accumulation of interest in this advertisement organization.

Prepaid expenses

The prepaid expenses paid in cash and recorded as assets prior to being used in books manufacturing company. In the book manufacturing company, the prepaid expense revenues would be used portion of an insurance premium. The prepaid expenses of adjusting entries will be permanent in this manufacturing company. This revenue made the result of book making business payments for services that will be received inn future in book manufacturing organization. This revenue had the nature of certain goods and services for prepaid expenses.

Recording of entries in accounting system

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The trail balance will be performed in accounting system at the end of closing period of months. This analysis included the performance budget to the actual and month to month for ensuring all of the accounts that were correctly stated. The journal entry input form will be prepared when the identification of adjust entry in the computerized accounting system. This form will be supported with the source documents and then these source documents will be justified the entry.

The source documents also reviewed the approved by the appropriate level of accounting management. Once this approval of accounting management had been obtained, then the journal entry was keyed into the general ledger system as either a standard journal entry. Then this journal was ready to record into the computerized accounting system. This journal entry will be posted to the accounting system by means of supporting with the source documents. After recording this journal entry, the computerized accounting system will be effective in manufacturing organization (Mark W. Lehman, 2008).

Ethical issue of manufacturing entries

Adjusting journal entry was an ethical issue that could result from the preparation of these manufacturing entries. This ethical issue was to manipulate the financial results by means of accruing more revenues and the expenses rather than appropriate elements and this ethical issue reduced the negatives of prepaid asset that would make the ensuring of all liabilities including expenses. The adjusting journal entry supported and approved the accounting system in order to make the enhancement to the financial and manufacturing organizations.


The accounting concepts and importance of entries to the accounting system were discussed. The four types of entries to the manufacturing company were described. The description of how these entries would be recorded in a computerized accounting system was included. The ethical issues that could result from the preparation of these four types of adjusting manufacturing entries were examined and the supporting points were concluded.