Lecture 6 - Learning Objectives Accounting 1A - Lecture 6...

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1 1 Accounting 1A - Lecture 6 Completing the Accounting Cycle: Preparation of the worksheet, closing entries, post-closing trial balance and reversing entries Lecturer: Sharron O’Neill Text reference: Chapter 3, Carlon, Mladenovic, etc 2 Learning Objectives 9 Using a worksheet to organise financial data 9 Explain the purpose of closing entries 9 Prepare the closing entries in the general journal and post them to the general ledger 9 Prepare a post-closing trial balance 9 Review the purpose of adjusting and reversing entries 9 Be able to describe and undertake all required steps in the accounting cycle 3 The Accounting Cycle Each month we do the following: Prepare any reversing entries Identify (new) Transactions Record transactions in Journal(s) Post journals to General Ledger Prepare a Trial Balance Prepare end-of-period Adjustments Prepare an Adjusted Trial Balance 4 Extending The Accounting Cycle Prepare and record reversing entries Identify Transactions Record in Journal(s) Post to General Ledger Prepare a Trial Balance Prepare end-of-period Adjustments Prepare an Adjusted Trial Balance Prepare interim financial statements (if required) Prepare Annual Financial Statements Close all Temporary Accounts Prepare a Post-Closing Trial Balance 5 Using Worksheets ¾ A worksheet… ¾ Is a tool which is used to help assemble all the information required to adjust the accounts and prepare interim financial statements ¾ It contains the information needed to close the profit and loss accounts for the period and so it can also assist with the closing process ¾ A worksheet is not ¾ A substitute for journals and ledgers, ¾ Part of the financial statements 6 Worksheet Preparation A worksheet involves the following steps: 1. Using the adjusted trial balance, enter all account titles and unadjusted general ledger balances in the appropriate columns (columns 1&3). 2. Enter the amounts of the end-of-period adjusting entries in the adjustments columns 3. Prepare the adjusted trial balance (col. 6&7) by adding the adjustments (col. 4&5) to the unadjusted trial balance (col. 2&3). (Confirm by comparing to the GL) 4. Extend adjusted balances of revenue and expense accounts to the Income columns and the remaining items to the Balance Sheet columns
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2 7 Unadjusted Adjustments
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Lecture 6 - Learning Objectives Accounting 1A - Lecture 6...

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