Adjusting Entry Simulator
See how deferrals and accruals are recorded. Select a scenario to visualize the journal entries and their impact on net income.
1. Initial Transaction
2. End-of-Period Adjusting Entry
3. Impact on Net Income
Key Rules & Definitions
Recorded at Period-End
Adjusting entries are prepared at the end of an accounting period (e.g., month-end, year-end) before creating financial statements.
Never Involve Cash
The purpose is to match revenues and expenses to the correct period, not to record a new cash transaction. The cash has already moved or will move later.
Affects Two Statement Types
Every entry impacts one Income Statement account (Revenue or Expense) and one Balance Sheet account (Asset or Liability).
