Hello Hassan,
As we have treated adjusting entries in the past, can you please list for us items that would be considered for adjustments apart from Accruals.

I have given you some examples below ... however keep in mind
that this is mainly a topic for accountants. As an implementor
you need to know how to meet users need for journal reversals and
off course you must have an understanding of what adjusting concept is.

Adjusting entries of are following types.
* Accrued expenses or accrued liabilities - Expenses already incurred. Not yet paid.
* Prepaid expenses or deferred expenses - Expenses paid in cash. Recorded as assets prior to being used.
* Accrued revenues or accrued assets - Revenues already earned. Not yet paid.
* Unearned revenues or deferred revenues - Revenues received in cash. Recorded as liabilities prior to being earned.
* Other - E.g. allowances, depreciation etc

Revaluations (physical assets, shares, foreign holdings, goodwills, shares, loans and bonds in foreign currency domination...), Corrections…
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Adjusted historical cost of assets and liabilities as opposed to their historical cost. This is
a method of revaluation by accountants at period ends and year ends. This adjusting method of revaluation attempts to reflect the change in the value of money, using a prix index (the average change in prices over a period). This method does not revalue the assets; it is money and not the asset which is revalued. And as such, these changes are reflected in the financial statements of organizations.

Thank you Hassan for sheding the light on this topic.You are great.
During implementation, do we include all the adjustments items in the REVERSAL SET.Please kindly explain the treatment of Prepayment and revenues with regards to reversal set and their journal treatment.

usually reversal sets are used for adjustment entries that needs to be reversed as of 1st of next month.
Here is a small example.
On 15-JAN-11 you ordered office supplies. On 16-JAN-11 you received office supplies however the invoice has not arrived yet. Financial reports will be run as of 31-JAN-11 and this office supplies expense must be recorded in order for to appear in the reports.

You do this accrual entry in GL on 31-JAN-10

DEBIT: OFFICE SUPPLIES $100
CREDIT: ACCRUAL $100

You reverse this entry as of 01-FEB-10, optionally using a reversal set.

DEBIT: ACCRUAL $100
CREDIT OFFICE SUPPLIES $100

This is just an example. Different accounting groups do this slightly differently, however an expense must be temporarily recorded and reversed the next day.

When the actual invoice comes in, lets say on 10-FEB-11, you would the invoice hence following entry would be produced by AP:

DEBIT: OFFICE SUPPLIES $100
CREDIT: PAYABLES $100

Net affect is that expense was recorded in January even though the invoice came late in February.

You would do another accrual for February, if invoice arrive in March.

Thank you hassan, you are great.
but from the accounting point of view,the last entries which occured as a result of the invoice debit "office supplies", Credit "Payables",.
The payment of the invoice will clear the credit side by debiting Payables.
What accounting entries will clear the debit side "office Supplies".
Thank you Sir

Please, Hasan, help us by shedding more light on this. Thank you.
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The office supplies have now been invoiced for, consumed for that period, and paid for. The monetary value of the office supplies would appear in that accounting period's income statement, reducing the net profit. That is it! No other accounting entries are needed to clear the debit side of "office Supplies".
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Let's imagine that the purchase of the office supplies for $100, the invoicing and its full payment all happened in the same accounting period, there would be no journal reversal in the current or any future period; and the only accounting entries in the current period will be:
a) CASH ACCOUNTING:

DEBIT: Office Supplies $100
CREDIT: Cash $100

b) ACCRUALS ACCOUNTING:

DEBIT: Office Supplies $100
CREDIT: Payables $100
---
DEBIT: Payables $100
CREDIT: Cash $100
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That's it. You received Office Supplies for $100 from the outside world, and you give Cash for $100 to the outside world. That is the end of it!

Gavrobere is right. We need office supplies debit entry in the system so that the expense line could show up in our income statement and hence reducing the income.

However in the example above, the expense would show up in January Income Statement. In February the debit to Office Supplies (Invoice entry) would be canceled out by the credit to Office Supplies (Accrual reversal). See below:

Accrual Entry on 31-JAN-10 (invoice has not arrived yet)

DEBIT: OFFICE SUPPLIES $100
CREDIT: ACCRUAL $100

Accrual Reversal as of 01-FEB-10

DEBIT: ACCRUAL $100
CREDIT OFFICE SUPPLIES $100 *

Actual Invoice entry as of 11-FEB-10

DEBIT: OFFICE SUPPLIES $100 *
CREDIT: PAYABLES $100

Lines with stars (*) are canceling each other out. The net affect is debit to Office Supplies in January 2010.