Use the evidence available at month-end to determine which balances have expired, been earned or been omitted. The source might be a work schedule, a supplies count, an insurance contract or a loan agreement. Calculate the period's amount first, then choose the asset or liability that explains why cash and profit differ.
Some adjustments reduce an existing asset; others create a new payable. Depreciation starts when an asset is placed in service under the stated convention, not necessarily when it was ordered. Do not add a cash line to a noncash adjustment. Check that the ending balance makes sense after posting, particularly when an original payment was recorded using the expense method.