Acco 310 - Chapter 3 handout

Acco 310 - Chapter 3 handout - Prof.: Mervat Saleh, CA...

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Prof.: Mervat Saleh, CA 1 Chapter 3 The Accounting Information System I - The Accounting Cycle: Steps Journalize the transaction Post the transaction to general ledger (and sub-ledgers) accounts Prepare the (unadjusted) trial balance Prepare necessary adjusting journal entries Prepare the (adjusted) trial balance Prepare financial statements Prepare closing journal entries for the year II- Adjusting entries Entries made at the end of an accounting period Brings all accounts up to date on an accrual accounting basis Four classifications of adjusting entries: Prepayment 1. Prepaid expenses: Prepayments made in cash and recorded as assets before item is used Example: rent and insurance 2. Unearned revenues : Revenue received in cash and recorded as liabilities before being earned Example: Rent, magazine subscriptions, deposits Accruals 3. Accrued revenues : Revenues earned but not yet received in cash and not recorded. Example: interest earned
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This note was uploaded on 01/17/2012 for the course ACCOUNTING 310 taught by Professor Ily during the Spring '11 term at Concordia Canada.

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Acco 310 - Chapter 3 handout - Prof.: Mervat Saleh, CA...

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