Adjustment Entries and Journal Entries

Adjusting entries are required to record differences between bank and book amounts. These entries ensure that the financial statements accurately reflect the company's financial position and performance.
These entries are typically made at the end of an accounting period.
Bank amounts are generally more reliable than book amounts because banks have internal controls and reconciliation procedures.
- Banks must be more reliable than book amounts; any difference must be recorded and adjustments must be made

Journal entries are the initial step in the accounting cycle, used to record financial transactions.
Office supplies are considered an asset when purchased because they have future economic value.
Example journal entry:
- Debit: Office Equipment - Increases the value of office equipment.
- Credit: [Account Name] - Decreases the value of another amount

Driving Lessons:
- Debit: Rent Expense 50 - Records the expense for renting facilities.
- Debit: Bank Account/Checking 50 - Shows an increase in the bank account.
- Credit: Sales - Driving Lessons 40 - Records revenue from driving lessons.
- Credit: Sales - Book Testing 10 - Sales from book testing activities