WRD_ch04 - 1 4 Completing the Accounting Cycle 2 After...

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Unformatted text preview: 1 4 Completing the Accounting Cycle 2 After studying this chapter, you should be able to: Completing the Accounting Cycle 1 Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements. 2 Prepare financial statements from adjusted account balances. 3 Prepare closing entries. 4-2 After studying this chapter, you should be able to: 4 Describe the accounting cycle. 3 1-3 4-3 4-3 Completing the Accounting Cycle (continued) 5 Illustrate the accounting cycle for one period. 6 Explain what is meant by the fiscal year and the natural business year. 4 1-4 4-4 1 4-4 Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements. 5 1-5 4-5 1 End-of-Period Spreadsheet (Work Sheet) Exhibit 1 6 1-6 4-6 Spreadsheet (Work Sheet) Spreadsheet (Work Sheet) Trial Balance Accounts Dr Cr Dr Cr Dr Cr Adjustments Adjusted TB Accounts are listed in the Trial Balance column using the ending balance found in the general ledger. Flow of Accounting Information 1 7 1-7 4-7 Flow of Accounting Information Spreadsheet (Work Sheet) Spreadsheet (Work Sheet) Trial Balance Accounts Dr Cr Dr Cr Dr Cr Adjustments Adjusted TB Adjustments are entered here. Two possibilities: 1. Deferrals Existing balances are changed. 2. Accruals New information is entered. 1 8 1-8 4-8 Adjustments are combined with the trial balance. Account balances are now adjusted. Trial Balance Accounts Dr Cr Dr Cr Dr Cr Adjustments Adjusted TB Spreadsheet (Work Sheet) Spreadsheet (Work Sheet) Flow of Accounting Information 1 9 1-9 4-9 Revenue and expense balances in the Adjusted Trial Balance column are extended to the Income Statement column. Adjusted TB Accounts Dr Cr Dr Cr Dr Cr Income State. Balance Sheet Spreadsheet (Work Sheet) Spreadsheet (Work Sheet) Flow of Accounting Information 1 10 1-10 4-10 Asset, liability, owners equity, and drawing balances in the Adjusted Trial Balance column are extended to the Balance Sheet column. Adjusted TB Accounts Dr Cr Dr Cr Dr Cr Income State. Balance Sheet Spreadsheet (Work Sheet) Spreadsheet (Work Sheet) Flow of Accounting Information 1 11 1-11 4-11 The balances for the accounts listed below appear in the Adjusted Trial Balance columns of the end-of- period spreadsheet (work sheet). Indicate whether each balance should be extended to (a) an Income Statement column or (b) a Balance Sheet column. 1. Amber Bablock, Drawing 2. Utilities Expense 3. Accumulated DepreciationEquipment 4. Unearned Rent 1. Fees Earned 2. Accounts Payable 3. Rent Revenue 4. Supplies 4-11 Example Exercise 4-1 1 Flow of Accounts into Financial Statements 12 1-12 4-12 1. Balance Sheet column 2. Income Statement column 3. Balance Sheet column 4. Balance Sheet column 5. Income Statement column 6. Balance Sheet column 7. Income Statement column 8. Balance Sheet column 1 Example Exercise 4-1 (continued) 4-12 For Practice: PE 4-1A, PE 4-1B Follow My Example 4-1 13 1-13 4-13 Prepare financial statements from adjusted account balances....
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WRD_ch04 - 1 4 Completing the Accounting Cycle 2 After...

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