33 - Statement of Retained Earnings • Shows changes to...

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Summary of Adjusting Entries Purpose of adjusting entries Measure income Update balance sheet Each adjusting entry affects One income statement account Revenue or Expense One balance sheet account Asset or liability Adjusted Trial Balance Trial balance prepared after adjusting entries are made and posted These amounts are used to prepare the financial statements: Income Statement Statement of Retained Earnings Balance Sheet Income Statement Reports net income or loss Revenues minus expenses Net income flows to Retained Earnings Statement
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Unformatted text preview: Statement of Retained Earnings • Shows changes to the Retained Earnings account • Net Income is added to beginning balance • Dividends are subtracted • Ending Retained Earnings flows to the Balance Sheet Balance Sheet • Reports assets, liabilities and equity • Shows that the accounting equation is in balance Closing the Books • Done after financial statements are prepared • Set temporary accounts to zero • Transfers balances to retained earnings account • Journalizes activity in Statement of Retained Earnings...
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This note was uploaded on 06/14/2011 for the course ACCOUNTING 23020 taught by Professor Na during the Spring '11 term at Kent State.

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