Chapter 3 Lecture 2 - Chapter3Lecture2

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Chapter 3 Lecture 2 Objective 4: Prepare financial statements from an adjusted trial balance. After all the adjusting entries have been posted to the ledger accounts and  new account balances have been computed, an  adjusted trial balance  should be prepared. Once in balance, the adjusted trial balance is used to  prepare the financial statements (income statement first, then the statement  of retained earnings and the balance sheet). The adjusted trial balance will  probably contain some accounts, such as Depreciation Expense, that were  not in the trial balance.  See page 181 for a sample Adjusted Trial Balance.  Notice all the new accounts  we added to do the adjustment through are in blue. Pages 181-182 show how we use the Adjusted Trial Balance to create the  Income Statement, Statement of Retained Earnings and the Balance sheet. In Accounting 101 you used a Worksheet to prepare the adjusting entries,  adjusted trial balance and statements.  The realty is that a computerized  accounting system like Peachtree, Great Plains, or QuickBooks will do all of this  for you. The work sheet is still a handy tool and gives you a quick visual. You will  not be required to do a worksheet for this class nor will you be tested on it.
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Objective 5: Describe the accounting cycle, and explain the purposes of  closing entries.
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This note was uploaded on 02/10/2011 for the course ACCOUNTING 201 taught by Professor Notsure during the Spring '11 term at Edmonds Community College.

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Chapter 3 Lecture 2 - Chapter3Lecture2

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