Week 2 DQ2 - Complete the Accounting Cycle - ACC205 Principles of Accounting I - AU

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ACC205 Principles of Accounting IHorngren, C.T., Harrison W.T., Oliver M.S. (2011).Accounting(9th ed). Upper Saddle River,New Jersey: Pearson Prentice Hall: ISBN: 97801325690571st Posting Due by Day 3. Complete the Accounting Cycle. Explain the purpose of adjustingentries. How is net income affected if adjusting entries are not made? Describe the four closingentries and explain their purpose.Adjusting EntriesBefore financial statements are prepared, additional journal entries, calledadjusting entries, aremade to ensure that the company's financial records adhere to the revenue recognition andmatching principles. Adjusting entries are necessary because a single transaction may affectrevenues or expenses in more than one accounting period and also because all transactions havenot necessarily been documented during the period.Closing EntriesTo update the balance in the owner's capital account, accountants close revenue, expense, anddrawing accounts at the end of each fiscal year or, occasionally, at the end of each accountingperiod. For this reason, these types of accounts are calledtemporaryornominal accounts.
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Term
Spring
Professor
Telado
Tags
Accounting, Income Statement, Revenue, Accountant, Generally Accepted Accounting Principles, capital account, income summary account

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