If the filing threshold has been met, or in other words, if, independent of the portability election, the estate is required to file an estate tax return based on the total value of the gross estate and the amount of any adjusted taxable gifts, no extension of time to elect portability is available and Revenue Procedure 2022-32 does not apply. On October 1, the business received the bill and wrote a check to the electric company on October 2.If the estate representative did not file an estate tax return within nine months after the decedent's date of death, or within fifteen months of the decedent's date of death (if a six month extension of time for filing the estate tax return had been obtained), the availability of an extension of time to elect portability of the Deceased Spousal Unused Exclusion (DSUE) amount depends on whether the estate has a filing requirement, based on the filing threshold provided under § 6018(a). The amount of electricity the company used equaled $12,000 for the month.
worked in the office for the month of September. Because the amount applies to the previous month, you make an accrued expense adjustment.Įxample: BlueButton Marketing, Inc. For example, your employees may work throughout the month but receive a paycheck on the first of the following month. This can happen with recurring bills, like utilities or payroll. Accrued expensesĪccrued expenses, or accrued liabilities, are those that you incur in a pay period but pay for at a later date. Here are some of the most common types of adjusting entries you can expect to make: 1. You create adjusting journal entries for different reasons at the end of accounting periods, such as accruals, deferrals or depreciation. Related: 6 Rules for Journal Entries 6 types of adjusting journal entries Adjusting entries can ensure you correct the amounts, rather than changing the original entry.
For example, if you buy supplies for your office, you can share that expense across different accounting periods until you buy new ones because you don't use them at one time.Ĭorrections for mistakes: When reviewing your documents, you may find errors in your balance sheets or income statements. Adjusting this entry ensures you accurately record revenue for the correct time period.Īccurate expense tracking: You may pay for certain expenses in a period but experience the value over time, so you may make adjusting entries to account for this. Some reasons why adjusting journal entries are necessary include:Īccurate financial records: If you performed work in August and a customer pays you in September, it's important to adjust the August income statement with that amount. It's important that businesses accurately record transactions to understand what they've earned and what they might budget for future accounting periods.
Related: Bad Debt Entry in an Expense Journal (Definition and Steps) Why are adjusting journal entries important? This encourages recording finances using the accrual method, or the time when a company performs services, rather than when they receive payment. Sometimes, adjusting entries are corrections to mistakes you might make when recording financial transactions for the first time. You typically enter these at the end of a fiscal period to ensure that any income you earn or expenses you incur reflect the fiscal period in which they occurred. Adjusting journal entries are entries in a financial journal that ensure a business allocates its income and expenses properly.
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