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Adjustment definition
An adjustment is a change made to a financial record, transaction, valuation, forecast, or statement to make it more accurate. It corrects an error, updates an assumption, or brings in new information.
Adjustments can apply to accounting entries, asset values, tax calculations, loan balances, trading positions, and financial projections. They bring records into line with the correct accounting treatment and the actual financial position.
An adjustment differs from a restatement: an adjustment updates an open or current record before it is finalised, while a restatement revises financial statements that have already been published. Accountants, analysts, and finance teams rely on adjustments so reported profit, tax, and valuation reflect actual performance rather than stale or duplicated figures.
Adjustment Example
A company records USD 10,000 in expenses, then finds that USD 2,000 was entered twice.
The accounting team makes an adjustment to remove the duplicate amount:
USD 10,000 - USD 2,000 = USD 8,000
The corrected expense balance is USD 8,000, which gives a more accurate view of the company's results.
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