Any financial system requires some account adjustments at times to verify balances. Some adjustments such as operational adjustments should be made to an adjustment account. Other adjustments should be adjusted to an proper offsetting account instead of the adjustment account.
Adjustments made to the adjustment account:
Cash over/under unless a separate cash over/under adjustments account is desirable
Minor adjustments to various accounts that cannot be reconciled such as other inventory, other receivables, other payables, bank accounts, etc.
The following adjustments should NOT be made to the general adjustment account:
General ledger beginning balances: Review Chart of Accounts > Entering General Ledger Beginning Balances for adjustment recommendations.
Inventory adjustments: Review [Inventory] Tracking Counts > Adjusting Inventory Counts and Value for adjustment details.
Accounts payable and other expense invoice adjustments: Review Expenses > Invoices > Changing or Voiding Vendor Invoices for instructions to change invoices rather than a journal entry adjustment.
Accounts receivable and other sales invoice adjustments: Review [Sales] Invoices > Changing or Voiding Sales Invoices for instructions to change invoices rather than a journal entry adjustment.
Accrual to cash accounting adjustments: Review Utilities > Create Cash Accounting Adjustments for adjustment recommendations.
The Default Adjustment G/L Account
is set by opening the tab as shown
below:
The Default Adjustment G/L Account
is often found within the Non-Operating Items at the end of the
chart of accounts as shown below:
Since this account is used primarily as a management tool to calculate the total adjustments for the period, the adjustment account balance should be zero'd at the end of each fiscal year.