KIC000073 - B/S and I/S) II Closing entries };o After...

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General Rules for Adjustments )-Adjustments NEVER involve cash s-Adjusunents ALWAYS affect both the balance sheet and the income statement 4 Adjusting Entries 1. Deferred expense Prepaid expense (asset)- Expense + 2. Deferred reven ue Unearned revenue (liability)- Revenue + 4 Adjusting Entries ~ cont. 3. Accrued expense Expense + Payable (liability) + 4. Accrued revenue Receivable (asset) + Revenue + 9
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What is a Contra-Account? ~an account that is an offset to, or deduction from, the primary acct. Book Value (Net Book Value, Carrying Value): the difference between an asset's acquisition cost and its contra-account Example: depreciation 10 Preparation of Financial Statements )i>Afteradjustments have been prepared and recorded, 'we prepare: »Income Statement s-Starement of retained earnings ~ Balance sheet »Statement of cash flows (uses
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Unformatted text preview: B/S and I/S) II Closing entries };o After statements are prepared, close all revenue and expense accounts, as well as dividends into retained earnings > Do this so you can start them over fOT the next year since income statement is for a period of time Balance sheets accounts are never closed Income statement accounts are called temporary, Balance sheet acct are called permanent. 12 Ch"p_. ClLop.4--------- The Complete Accounting Cycle Analyze transactions ,. Prepare and pestjournal entries ,. Unadjusted trial balance ,. Prepare and post adjusting entries ,. Adjusted trial balance ,. Prepare financial statements ,. . Prepare and post closing entries ,. Post-closing trial balance 13...
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This note was uploaded on 09/01/2011 for the course ACCT 284 taught by Professor Clem during the Fall '08 term at Iowa State.

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KIC000073 - B/S and I/S) II Closing entries };o After...

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