Adjustments

This Overheads code records the cost of adjustments incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Correcting a payroll error

A payroll run overpays an hourly employee by £180 because of a timesheet error, and the correction is booked through 7009 (Adjustments) rather than unpicking the original wages entry — a credit of £180 to 7009 to bring the overheads total back down once the amount is recovered, or a debit if the adjustment runs the other way (an underpayment topped up outside the normal payroll cycle). Because it's a correcting entry rather than a genuine cost, the direction depends entirely on which way the original error went.

Why this code doesn't vary much by industry

7009 is a catch-all for payroll corrections and one-off reconciling entries, and how often it gets used says more about the quality of a business's payroll process than what sector it operates in. A business running payroll through well-integrated software may barely touch this code from one year to the next, while one relying on manual timesheets and spreadsheets can see it used every month, regardless of whether it's a shop, an office or a building site.

Commonly confused with

Because code 7008 (Recruitment Expenses) sits right next to this one in Overheads, it's a common mis-posting target. Code 7009 is specifically for adjustments, while 7008 covers recruitment expenses — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Adjustments won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads