The term "adjustment entries" refers to subsequent postings in accounting that are made to rectify previous incorrect or incomplete entries. Their purpose is to ensure the accuracy of financial records and reflect actual business transactions. Corrections can be made for both income and expense entries and may address issues such as incorrect amounts, wrong accounts, or errors in the assignment of accounting periods.
Automated error detection: Identifies inconsistencies, duplicate entries, or implausible values in accounting data.
Reversal posting: Generates a counter-entry to fully cancel out an incorrect transaction.
Reposting function: Transfers amounts between accounts to correct misallocations.
Correction input form: Dedicated form for targeted entry of correction postings, including validation and approval workflows.
Logging and traceability: Records all correction entries with timestamp, user ID, and reason for change.
Version control: Maintains a history of original and corrected entries for transparency and auditability.
Cross-period correction: Allows adjustments to be made even after a financial period has been closed, with proper documentation.
A misposted incoming payment is reversed and reposted to the correct customer account.
An investment amount incorrectly posted as an expense is reclassified to the correct asset account.
A duplicate invoice entry is identified and canceled using a reversal posting.
A VAT amount recorded in the wrong month is rebooked to the correct accounting period.
An error in currency conversion is corrected via a subsequent entry.