[ejkitty]

I have joined a very small company that previously did not abide by GAAP. We are now having to fix 2009 to abide by GAAP so that way moving into 2010 we are on the right track to obtain investors for the company. So we are having to adjust entries that were made in the incorrect month to the correct month. What is the best way to adjust entries that were for example: Jan 2009 expenes but recorded in Feb 2009? What account would be the best to create as the "wash out account" for all of these entries?

[morgaine300]

I have questions for you. First, is it necessary to make sure that interim monthly statements are totally correct like that? You want the annual one correct, but it's not necessary to have every month correct. Like many adjusting entries are only done at year-end, etc. That is going to depend on management opinion and whether you think prospective investors are going to care. Quite personally, I'd be looking at the annual statement.

Second question: if you really want all those monthly statements correct, is there not a way to correct them in the right month? There are other ways, but the easy way is to literally reverse out whatever is incorrect and make a new entry that is correct. What software are you using?

Given that, I'm not sure I see why you need a "wash out" account.

Are you getting into anything that affects an earlier year than 2009? That is, that is going to end up affecting the 2009 (annual) statements that shouldn't?