There are three main questions that business owners ask me about Adjusting Journal Entries (AJE’s):
- What are these?
- Why do I need them?
- How do I post them?
An AJE is used to record transactions that have not yet been appropriately recorded in your general ledger. Basically, these are entries that make your books true and accurate.
These entries should never be skipped; if skipped, your CPA will need to do more work to reconcile your accounts, which ends up being more of an expense to you. These entries are easy to enter and should take very little time, I will use QuickBooks Online (QBO) as an example:
- Click the add logo in the top right (Circle with a “+” on it)
- Click “Journal entry” under the “Other” section
- Change the Journal No. to one provided – if not submitted you can use your own
- Add the account – this can be simplified if you and your CPA use the same account numbers
- Add the debit or credit amount – double check you use the correct column
- Add a description – if not provided then you can use your own
- Fill out any remaining fields you know, for example: Name
- Enter Additional rows as needed
- When done click “Save and Close”, if you don’t see it click the arrow next to “Save and New”
This is a simple task that will let you see the real picture of your business. By posting these AJEs when your CPA gives them to you, then you will free up more time for your CPA to dive in a little deeper to try and save you on your taxes; who doesn’t love saving money on taxes? So remember always to post your AJE’s.
As always, our CPAs at Mason + Rich are ready to answer any additional questions. Feel free to call us at 603-224-2000.