ACCT Notes ch.4

Posted by admin on February 12, 2018 in Articles

Class 7
Chapter 4
The adjustment process
Accounting 2610
Xiumin Martin
2/5/2014
1 Plan

Prepare financial statements
Closing entry2 The Accounting Cycle
Start of the Accounting Period
Phase 1:
During the
Accounting
Period.
Phase 2:
End of the
Accounting
Period.?? Perform transaction analysis.
Perform transaction analysis.
?? Record journal entries.Record journal entries.
?? Post amounts to general ledger.
Post amounts to general ledger.
?? Prepare a trial balance.
Prepare a trial balance.
?? Record and post adjustingRecord and post adjusting entries.
entries.
?? Prepare financial statements.
Prepare financial statements.
?? Record and post closing entries.
Record and post closing entries.End of the Accounting Period3 Financial Statement
Preparation

1.The next step in the accounting cycle
is to prepare the financial statements
Income Statement3.Statement of Retained Earnings
Balance Sheet4.Statement of Cash Flows2.(Chapter 12)Prepared
from
T-account
balancesPrepared from information
provided in balance sheet,
statement of retained
earnings
and income statement
4 5 The Closing Process

Why do we need to close

Balance Sheet account balances carry forward from
period to period
Income Statement accounts do not carry forwardWhat do we do in the process
Transfer net income (or loss) to Retained Earnings.
Establish a zero balance in each of the temporary
accounts to start the next accounting period.6 Temporary
7 Closing Entries? Temporary (or nominal) accounts that
are closed to retained earnings at the
end of the period
-• Revenues.• Revenues.
Revenues.
•• Expenses.
Expenses.
•• Gains.
Gains.
•• Losses.
Losses.
•• Dividends
Dividends declared.
declared.8 Closing Entries

Permanent (or real) accounts and
are never closed at the end of the
period?…