Which account would normally not require an adjusting entry?

Question

wages expense
accounts receivable
accumulated depreciation
capital stock

Answer 1

None of those "require" an adjusting entry. An adjusting entry is when you made a mistake, estimated incorrectly or some other thing which needs adjustment.

Answer 2

The person who wrote that an adjusting entry and a correction (correcting entry) are the same thing is wrong! In fact, I had just finished teaching my accounting students what the difference it.

A correction is used to fix a "mistake" or "error." But an adjustment is something that is done at the end of an accounting period to bring the ledger balances to their "true balances." In other words, in accrual accounting, adjusting entries are used to "adjust" for things that cross over between two accounting periods.

It's the concept of matching everything up with the right accounting periods. For example, suppose I do my financials on a monthly basis, and had bought a 3 month insurance policy in January for $900.

I actually spent $900 in January, but in accrual accounting, I would need to "adjust" for what would be January's insurance. That 900 is for January, February, and March. So I would enter an adjustment for 300 to show how much of that 900 represents January's. Same goes for both February and March.

So to answer your question of which account wouldn't normally require an adjusting entry, it would be the capital stock account. Anytime somebody invests money in the business, it's for that period and they'd get stock in exchange for giving us cash. Nothing "crosses over" multiple accounting periods.

With the others, there's some cross over between various accounting periods. For example, with wages, we might have employees who work the last few days of a month, but won't be paid until the first week or so of the following month. Well if we do our financials on a monthly basis, then we'd need to show how much of those wages actually go with January vs. February. So eventhough we won't pay the money until Feb, it's for the work our employees did during January.

And in accrual accounting, we need to match everything done with the right accounting period.