Unformatted text preview: Each account's adjusted trial balance transfers directly to either the fourth or fifth set of columns. Move all revenue and expense account balances to the income statement columns, and move all other account balances (assets, liabilities, owner's capital, and owner's drawing) to the balance sheet columns. Then total each of the final four columns. Unless net income is zero, the columns have unequal debit and credit totals. If total credits are greater than total debits in the income statement columns, the company has net income, and the difference between these columns is added to the work sheet's income statement debit column and balance sheet credit column on a line labeled Net Income . The difference is added to the balance sheet credit column because net income increases owner's equity, and increases to owner's equity are recorded with credits. If total debits are greater owner's equity, and increases to owner's equity are recorded with credits....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10