Week 3 chapter 4 - 4 Completing the Accounting Cycle...

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142 Chapter 4 Completing the Accounting Cycle Scan Study Objectives Read Feature Story Read Preview Read text and answer Before You Go On p. 150 p. 160 p. 168 Work Demonstration Problem Review Summary of Study Objectives Answer Self-Study Questions Complete Assignments After studying this chapter, you should be able to: 1 Prepare a worksheet. 2 books. 3 Describe the content and purpose of a post-closing trial balance. 4 State the required steps in the accounting cycle. 5 Explain the approaches to preparing correcting entries. 6 balance sheet. The Navigator STUDY OBJECTIVES Feature Story EVERYONE LIKES TO WIN When Ted Castle was a hockey coach at the University of Vermont, his play- ers were self-motivated by their desire to win. Hockey was a game you either won or lost. But at Rhino Foods, Inc. , a bakery-foods company he founded in Burlington, Vermont, he discovered that manufacturing-line work- ers were not so self-motivated. Ted thought, what if he turned the food- making business into a game, with rules, strategies, and trophies? Ted knew that in a game knowing the score is all-important. He felt that only if the employees know the score—know exactly how the business is doing daily, weekly, monthly—could he turn food-making into a game. But Rhino is a closely held, family-owned business, and its financial statements The Navigator Explain the process of closing the Identify the sections of a classified
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143 and profits were confidential. Ted wondered, should he open Rhino’s books to the employees? A consultant put Ted’s concerns in per- spective when he said, “Imagine you’re playing touch football. You play for an hour or two, and the whole time I’m sit- ting there with a book, keeping score. All of a sudden I blow the whistle, and I say, ‘OK, that’s it. Everybody go home.’ I close my book and walk away. How would you feel?” Ted opened his books and revealed the financial statements to his employees. The next step was to teach employees the rules and strategies of how to “win” at making food. The first lesson: “Your opponent at Rhino is expenses. You must cut and control expenses.” Ted and his staff distilled those lessons into daily scorecards—production reports and income statements—that keep Rhino’s employees up-to-date on the game. At noon each day, Ted posts the previous day’s results at the entrance to the production room. Everyone checks whether they made or lost money on what they produced the day before. And it’s not just an academic exercise: There’s a bonus check for each employee at the end of every four-week “game” that meets profitability guidelines. Rhino has flourished since the first game. Employment has increased from 20 to 130 people, while both revenues and profits have grown dramatically.
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Week 3 chapter 4 - 4 Completing the Accounting Cycle...

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