Fixing Bookkeeping Issues: Adjusting (Phase 3)

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How Proper Adjusting Entries Clean Up the Past Without Breaking the Future

Once problems are identified and root causes are fixed, it’s time to make targeted adjustments.

This phase is about correcting history without creating new issues.

The Core Problem: Transactions in the Wrong Place

Many businesses capture transactions but place them in the wrong accounts:

Capital purchases booked as wages
Owner draws recorded as expenses
Inventory costs expensed incorrectly

This creates distorted profits and misleading reports.

One-Time Adjustments Explained

Adjusting entries during cleanup are not recurring entries. They are:

One-time corrections
Designed to realign financials
Used to reflect actual business activity

These are not monthly habits — they are surgical fixes.

Reclassification vs. Reconciliation

In phase three, we:

Reclassify transactions to correct accounts
Update AR, AP, payroll, and loan balances
Reconcile bank and credit card accounts accurately

Only after adjustments are complete can reconciliations truly work.

Why This Phase Matters

Without proper adjustments:

Reports look “fixed” but aren’t accurate
Taxes may still be overstated
Future reporting remains unreliable

This phase connects diagnosis to resolution.

Watch the Video

https://www.youtube.com/watch?v=q7OTII9W6eE

How To Make Estimated Tax Payment

Weekly Bookkeeping Checklist

Common Issues Businesses Discover During Bank Reconciliation

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AKIF CPA

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