COMPLETING THE ACCOUNTING CYCLE
A. FIRST, A REVIEW OF HOW WE PREPARED FINANCIAL
STATEMENTS FROM THE ADJUSTED TRIAL BALANCE.
B. AND NOW, AN EXAMPLE OF A MORE COMPLEX BALANCE SHEET
Dec. 31, 20X1
REPORTING & ANALYZING INVENTORY
PERIODIC vs Perpetual METHOD- recall the differences between the
two methods of periodic and perpetual? Heres a quick review:
The perpetual method showing its effects on the various accounts:
1. This discussion
ANALYZING TRANSACTIONSTHE RECORDING PROCESS
FIRST, A QUICK REVIEW OF TERMINOLOGY: ASSETS;
LIABILITIES; RETAINED EARNINGS; REVENUE & EXPENSESA.
Income Statement 1. Components of an Income Statement:
Revenues inflows of assets (cash or A/R) as
ACCOUNTING AND BUSINESS
Note: some of this material is NOT in the text but you are responsible for it.
Accounting is the Language of Business
A Business is formed to earn a profit.
TYPES OF BUSINESSES
The Matching Concept and the Adjusting Process
Also known as Accrual Accounting!
Background: remember the accounting period concept?
THE ENTIRE CHAPTERS POINT:
MEASUREMENT- what, when and how
What should be recorded, when & how
CostofgoodssoldIn a perpetual inventory system, the cost of
goods sold is continually compiled over time as goods are sold to
customers. This approach involves