Mentor an Accounting Clerk
I am an accountant in a medium- sized manufacturing company and have been asked to mentor you since you are a new accounting clerk in my accounting department. There are a few things that I need to go over with you that you need to know and remember. The first thing is I will explain why adjusting entries are necessary. Next, I will describe the 4 types of adjusting entries and provide a manufacturing industry example of each. Then, describe how these entries would be recorded in a computerized accounting system. Lastly, I will describe two ethical issues that could result from the preparation of these manufacturing entries. Adjusting journal entries are made at the end of each closing period to adjust the account balances. Theses closing periods could be monthly, quarterly, annually, or a mixer of them (Godwin, 2010). Most times, this is necessary in order to achieve a clean cut-off at the end of the accounting period and to ensure the accounts are complete and accurate. Current account balances may not represent correct balances because mistakes were identified in the posting of transactions and/or the accounting records are not updated to reflect new transactions or amounts changes in previous transactions. Examples would include amounts posted to the wrong accounts and timing differences in recognizing revenues and expenses between the accrual and the cash basis of accounting. Adjusting entries can be either temporary or permanent. If the entry is temporary at some point the adjusting entry will be reversed or another adjusting entry will be made to the account (Godwin, 2010). There are four types of adjusting entries that you should know; I will also give you a manufacturing industry example for each of the entries. These entries are called accrued revenues, deferred revenues, accrued expenses, and deferred expenses (Godwin, 2010). Revenues that are already earned but not yet paid by the costumer or posted to the general ledger are accrued revenues