The journal entries made at the end of an accounting period to update account balances before financial statements are adjusting entries.
They are a core part of accrual accounting, where revenue and expenses are recorded in the periods in which they are earned or incurred rather than only when cash changes hands. An adjusting entry can recognize an expense already incurred, record revenue already earned, allocate a prepaid cost, or move part of unearned revenue into earned revenue.
Common examples include accrued wages, interest payable, depreciation, supplies consumed, and revenue earned from a customer who has not yet been billed. These entries normally affect at least one income-statement account and one balance-sheet account, but they do not ordinarily involve cash. Their purpose is to make reported balances reflect the economic activity of the period.
Adjusting entries are different from correcting entries, which fix mistakes, and reversing entries, which optionally undo selected accruals at the start of the next period. Closing entries come later in the cycle: they transfer temporary revenue and expense balances to equity and reset them for the new period.