[Gabriella]

Reclass vs Adjusting entries, how do I know which one to use ?

Adj JE -designed to correct misstatements found in a client’s records

Reclass JE – drafted by the auditors to assure fair presentation of the client’s financial statements, such as an entry to transfer accounts receivable credit balances to the current liabilities section of the client’s balance sheet. Since reclassification entries do not correct misstatements in the client company’s accounting records, they are not posted to the client’s ledger accounts.