What are “Adjusting Journal Entries,” sometimes called “General Journal Entries” or “General Journal Adjustments”?

A company’s financial records are intended to track all transactions and provide company management with the ability to manage the business. The tax return information on the other hand is strictly used for tax reporting consistent with tax law and is often very different than the generally accepted accounting principles applied when maintaining the company’s books. And in many cases, complete financial information is not included in the tax return because it is not required by law and is to the taxpayer’s detriment to provide it. We recommend that the company’s accounting records be maintained as the primary source of financial information and that you do NOT attempt to adjust these financial records to match the tax return information. Although they are related, they serve very different purposes.

If you have additional questions about best practices to minimize your audit risk and maximize your tax refund, contact us at (480) 888-7111 to schedule your consult.

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