Chapter 4notes

Chapter 4notes - -Post-Closing Trial Balance-correcting...

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Chapter 4: Completing the Accounting Cycle -Worksheet before financial statements -Dividends is a retained earnings account -Balance sheet: credit from net income becomes debit until net income is posted -Net income: debit on income statement, credit on balance sheet -Journalizing and posting of adjusting entries follows preparation of financial statements -Accumulated depreciation is a permanent, balance sheet account -*ALL BALANCE SHEET ACCOUNTS ARE PERMANENT -Temporary (Closed): -all revenue accounts -all expense accounts -dividends -Permanent (Not Closed): -all asset accounts -all liability accounts -stockholders’ equity -At the end of the accounting period, company transfers temporary to permanent -closing entries done after financial statements prepared: 1) close revenues to income summary 2) close expenses to income summary 3) close income summary to retained earnings 4) close dividends to retained earnings
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Unformatted text preview: -Post-Closing Trial Balance-correcting entries must be done before correcting-Classified Balance Sheet-Long-Term Investments: stocks and bonds, long term assets (land and buildings) not being used in operating activities (no depreciation expense)-Property, Plant & Equipment:-long useful lives-currently used in operations-depreciation expense-accumulated depreciation-Current Ratio: Current Assets/Current Liabilities *should be between 1.5 and 2-SE:-proprietorship: one capital account-partnership: capital account for each partner-corporation: capital stock and retained earnings-Net income= Income statement credit-debit OR balance statement debit-credit-Income statement: revenues and expenses (not unearned)-balance sheet: assets, liabilities, CS, dividends-Paid x for salaries due to employees, of which y is for September Sal Expense y Sal Payable x-y Cash x...
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