Direction of Transaction Effects•For Assets: DR = Left = Increase; CR Right DecreaseSlide 3Chapter FourCR = Right = Decrease•For Liab and SE: CR = Right = Increase;DR = Left = DecreaseAssets+ DR−CRNormalLiabilities−DR+ CRNormalShareholders’ Double-Entry BookkeepingBalanceBalanceEquity−DR+ CRNormalBalanceRetained Earnings−DR+ CRNormalContributed Capital−DR+ CRSlide 4Chapter FourBalanceNormalBalanceRevenues−DR+ CRNormalBalanceExpenses+ DR−CRNormalBalance
Learning Objectives for Ch 4 1.What is accounting cycle? 2.The purpose of a trial balance.3.Analyze the adjustmentsnecessary at the end of the period to update balance sheet and income statement accounts.4Prepare fo r financial statementsSlide 5Chapter Four4.Prepare four financial statements.5.The closing process.Accounting CycleDuring the period:OAnalyze transactions.ORecord journal entries.OClose revenues, gains, expenses, and lRidOPost amounts to general ledger.OPrepare financiallosses to Retained Earnings.Slide 6Chapter FourAt the end of the period:OUnadjusted trial balanceOAdjust revenues and expenses.Prepare financial statements.ODisseminate statements to users.
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