What is adjusting entry in SAP (SRD-FIN-ACC - FIN-Financial Accounting)?

SAP Term: adjusting entry

• Component: SRD-FIN-ACC

• Component Name: FIN-Financial Accounting

• Description: Manual transfer posting, whereby only accounts or account assignments are adjusted. Adjusting entries are created by using the journal entry voucher.

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• Key Concepts: 
  An adjusting entry is a journal entry made at the end of an accounting period to correct accounts before the financial statements are prepared. It is used to record any unrecognized income or expenses for the period. Adjusting entries are necessary to ensure that the financial statements accurately reflect the company’s financial position. 
  
  How to use it: 
  Adjusting entries are typically made at the end of an accounting period, such as a month or a year. The entries are made to correct any errors or omissions that have occurred during the period. For example, if a company has not recorded an expense that was incurred during the period, an adjusting entry would be made to record the expense. 
  
  Tips & Tricks: 
  When making adjusting entries, it is important to ensure that all accounts are properly adjusted and that all entries are properly documented. This will help ensure that the financial statements accurately reflect the company’s financial position. 
  
  Related Information: 
  Adjusting entries are part of the accrual basis of accounting, which is one of two methods used to record transactions in accounting. The other method is the cash basis of accounting.