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Accounting Chapter 4 Notes

The data came from the ledger accounts before any

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Unformatted text preview: [Total ________ amount] Step by step description of the worksheet: 1. Enter the account titles and their unadjusted balances in the Trail Balance columns of the worksheet and total amounts. The data came from the ledger accounts before any adjustments. 2. Enter the adjusting entries in the adjustments columns, and total the amounts. 3. Compute each account’s adjusted balance by combining trail balance and the adjustment figures. End each account’s adjusted amount in the Adjusted Trail Balance columns. 4. Draw an imaginary line above the first revenue account (in this case, Service Revenue). Every account above that line (assets, liabilities, and equity accounts) is copied from the adjusted Trail balance to the Balance Sheet column. Every account below the line (revenue and expenses) is copied from the Adjusted Trail Balance to the Income Statement Columns. - Key takeaway: Worksheet is a tool that puts the whole accounting process in one place. Remember that debits = credits in the first three columns. Columns 4 & 5 (income statement and Balance Sheet) debits do not equal credits until you post the net income or net loss for the period. - If expenses exceed revenues, the result is a net loss. In that event, print Net loss on the worksheet next to the result. The net loss amount should be entered in the credit column of the income statement (to balance out) and in the debit column of the balance sheet (to balance out) Completing the Accounting Cycle - The worksheet helps accountants make the adjusting entries, prepare...
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