 Now let's focus on some of the differences between the adjusting entries and the normal day-to-day input entries. The normal day-to-day input entries are usually done not with a journal entry but with the use of the forms. The forms being designed to make the data input as easy as possible as well to have the connection of those forms so that we can communicate with the people we're doing business with, customers, vendors, and employees. So the general rule for the normal day-to-day stuff is if there's a form that I can do the data input with, I'm going to use the form rather than a journal entry. If there is no form then I'm going to think is cash affected and I'll use typically a deposit or check or expense form and if that's not the case only then do I default to entering just a journal entry. Now note that all of these forms except the things that aren't actual entering a transaction like an estimate for example or a purchase order all of the forms enter a journal entry into the system but they do so with the with these data input forms. With the period end adjustments we're going to be doing all of them with journal entries. So we could do the journal entries using the register if it's a fairly easy with only like two accounts affected adjusting entry but we're going to be using journal entry forms to do all of them. Also obviously all the other data input forms are happening as they happen in real time whereas the adjusting entries are only going to happen at the end of the period. In our case we're going to do them just for the end of February here so we're going to imagine we need to do our financials just for the end of February. Obviously normally you would only you would be doing adjusting entries either on a monthly basis or possibly just at the end of the year December for most small businesses or most companies in order to do taxes or financial reporting on the yearly basis but we have two months of data input so our cutoff date is going to be 228 will be the cutoff date for us so all of the adjusting entries will be entered as of that point in time. That means that they're not going to be the financial statements we're not even designing or looking to be perfectly on say the accrual basis method or whatever basis we're looking at for the entire period we're going to recognize that it's not going to be perfect on say 222 or 223 or 225 February 25th for example because we're going to we're going to sacrifice that to make the ease of the data input as easy as possible and then get the financial statements correct when we need them for reporting purposes and tax purposes at the end of the period in our case 228. Now another difference usually is that a classical adjusting entry will usually not involve cash cash has been dealt with because we entered the cash transactions and we did the bank reconciliations so cash is usually good it's usually a timing issue with the adjusting entries so one cash isn't affected which is a big difference than many other kind of transactions and two there's usually a balance sheet account and an income statement account affected now that's not always going to be the case but a classical adjusting entry that is the case it's a timing difference and therefore there's usually going to be a balance sheet and an income statement account affected so those are the general rules adjusting entries going to be entered with a journal entry instead of a forum adjusting entries are going to be entered as of the end of the period and adjusting entries usually have a balance sheet and an income statement account at least one of those two they might have more accounts involved but that's not always the case as we will see here but that's a general rule now then we're also going to have the concept of reversing entries now so the reversing entries are going to be entries that we enter the day after the end of the period in our case February 28th the day after is going to be the first period of the next the first day of the next period which is March 1st in our case or if you're doing December your end December 31st you reverse the reversing entries in January now the only reversing entries we would make are for entries that were temporary in in nature so so if there's a permanent adjusting entry we entered like a depreciation for example we typically wouldn't reverse that but if there's some kind of temporary difference it's a timing difference and we're trying to say hey look the accounting process is doing great the way they have it i don't want to mess up their system such as with payroll for example payroll is complicated enough they're going to use whatever system they have entering payroll every two weeks or every month or every week whatever they do i'm going to have to adjust it to fit into the period end for adjusting entries but i don't want to mess up the payroll because whatever system they're on is good so i'm gonna have to reverse it as of the first day of the next period that's the general idea and again the idea being i want the accounting department to do things as smoothly as possible and if there's some kind of timing issue that's messed up because of the accrual method or whatever method we need to use then i don't want to mess them up i want to try to automate the system as much as possible let them do what they need to do and then make periodic adjustments to have the financial statements correct at the point in time that we need the reporting of them