Chapter 3. Adjusting the accounts. Appendix 3A: An alternative method of recording deferrals

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Chapter 3. Adjusting the accounts. Appendix 3A: An alternative method of recording deferrals"

Transcription

1 1

2 Chapter 3 Adjusting the accounts Appendix 3A: An alternative method of recording deferrals 2

3 Learning objectives 1. Prepare adjusting entries for prepaid expenses originally recorded in an expense account 2. Prepare adjusting entries for unearned revenues originally recorded in a revenue account 3

4 Learning objective 1 Prepare adjusting entries for prepaid expenses originally recorded in an expense account 4

5 Prepaid expenses initially recorded as expense Until now we have recorded prepaid expenses as a debit to an asset account such as Prepaid Expense and a credit to Cash However, prepaid expenses can initially be recorded in the related expense account The adjusting entry will differ depending on whether the initial payment was recorded as an asset or an expense Each method produces the same ending balances 5

6 Prepaid expenses initially recorded as expense Example: Paid $360 for an insurance premium At the end of the accounting period $10 had expired so is recorded in the Insurance Expense account $360 - $10 = $350 remains in the Prepaid Insurance account at the end of the accounting period 6

7 Prepaid expenses initially recorded as expense Initial payment: Initial payment recorded as an ASSET Dec. 1 Prepaid Insurance 360 Cash 360 Initial payment recorded as an EXPENSE Dec. 1 Insurance Expense 360 Cash 360 Adjusting Entry: Initial payment recorded as an ASSET Dec. 31 Insurance Expense 10 Prepaid Insurance 10 Initial payment recorded as an EXPENSE Dec. 31 Prepaid Insurance 350 Insurance Expense 350 7

8 Prepaid expenses initially recorded as expense General ledger accounts: Initially recorded as an ASSET Prepaid Insurance No. 142 Dec. 1 Payment Dr 31 Adjusting Dr Initially recorded as an EXPENSE Prepaid Insurance No. 142 Dec Adjusting Dr Insurance Expense No. 542 Dec Adjusting Dr Insurance Expense No. 542 Dec. 1 Payment Dr 31 Adjusting Dr 8

9 Prepaid expenses initially recorded as expense Remember: The ending balance of each account is exactly the same under both methods 9

10 Learning objective 2 Prepare adjusting entries for unearned revenues originally recorded in a revenue account 10

11 Unearned revenues initially recorded as revenue Until now we have recorded the receipt of cash for unearned revenues as a debit to Cash and a credit to the liability account, Unearned Revenues However, unearned revenues can initially be recorded in a revenue account The adjusting entry will differ depending on whether the initial receipt was recorded as a liability or as revenue Each method produces the same ending balances 11

12 Unearned revenues initially recorded as revenue Example: Received $900 for services to be provided in the future At the end of the accounting period $600 revenue was earned so is recorded in the Revenues account $900 - $600 = $300 remains in the Unearned Revenues account at the end of the accounting period 12

13 Unearned revenues initially recorded as revenue Initial payment: Initial payment recorded as a LIABILITY Dec. 1 Cash 900 Unearned Revenue 900 Initial payment recorded as REVENUE Dec. 1 Cash 900 Revenues 900 Adjusting Entry: Initial payment recorded as a LIABILITY Dec. 31 Unearned Revenue 600 Revenues 600 Initial payment recorded as REVENUE Dec. 31 Revenues 300 Unearned Revenue

14 Unearned revenues initially recorded as revenue General ledger accounts: Initially recorded as a LIABILITY Unearned Revenue No. 230 Dec. 1 Payment Cr 31 Adjusting Cr Initially recorded as REVENUE Unearned Revenue No. 230 Dec Adjusting Cr Revenues No. 400 Dec Adjusting Cr Revenues No. 400 Dec. 1 Payment Cr 31 Adjusting Cr 14

15 Unearned revenues initially recorded as revenue Remember: The ending balance of each account is exactly the same under both methods 15

Chapter 4. Completing the accounting cycle. Appendix 4A: Reversing entries

Chapter 4. Completing the accounting cycle. Appendix 4A: Reversing entries 1 Chapter 4 Completing the accounting cycle Appendix 4A: Reversing entries 2 Learning objective 1. Prepare reversing entries and describe their purpose 3 Reversing entries Reversing entries are optional

More information

COMPLETION OF THE ACCOUNTING CYCLE - Closing Entries -

COMPLETION OF THE ACCOUNTING CYCLE - Closing Entries - COMPLETION OF THE ACCOUNTING CYCLE - Closing Entries - Worksheet Overview Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Account Titles Debit Credit Debit Credit Debit

More information

Principles of Accounting I ACCT-1104

Principles of Accounting I ACCT-1104 Principles of Accounting I ACCT-1104 Adjusting Entries Review Click Here to Proceed How to Use this Reivew For each transaction you are given, write your answer on a piece of paper. Once you have answered

More information

Chapter 2. Analyzing transactions

Chapter 2. Analyzing transactions 1 Chapter 2 Analyzing transactions 2 Learning objectives 1. Explain the steps in the accounting cycle and each step s supporting documentation 2. Explain the purpose of source documents 3. Describe an

More information

Vol. 1, Chapter 3 - Accounting Adjustments

Vol. 1, Chapter 3 - Accounting Adjustments Vol. 1, Chapter 3 - Accounting Adjustments Problem 1 1. ($20,000 2,000) 48 = $375 per month 2. Jan. 31 Depreciation Expense $375 Accumulated Depreciation Van $375 To record depreciation expense for January

More information

Completing the Accounting Cycle

Completing the Accounting Cycle C H A P T E R 4 Completing the Accounting Cycle Financial Accounting 14e Warren Reeve Duchac human/istock/360/getty Images Flow of Accounting Information (slide 1 of 5) End-of-Period Spreadsheet (Work

More information

b. Do not recognize revenue until steel is shipped. c. Do not recognize revenue until next year after the games are played.

b. Do not recognize revenue until steel is shipped. c. Do not recognize revenue until next year after the games are played. CHAPTER FOUR SE4-2 Revenue recognition a. Recognize revenue from car sales for 12,000. Notes receivable $12,000 Sales revenue $12,000 b. Do not recognize revenue until steel is shipped. c. Do not recognize

More information

Accounting Notes. Cash - includes money and any medium of exchange that a bank accepts at face value

Accounting Notes. Cash - includes money and any medium of exchange that a bank accepts at face value Asset Accounts: Cash - includes money and any medium of exchange that a bank accepts at face value Accounts Receivable - a record of an oral or implied promise of future cash receipts in exchange for goods

More information

Time Period Assumption

Time Period Assumption ILLUSTRATION 3-1 GUIDELINES TO REPORT REVENUE AND EXPENSES Time Period Assumption Economic life of business can be divided into artificial time periods Revenue Recognition Principle Revenue recognized

More information

Accounting Cycle. Matching Principle

Accounting Cycle. Matching Principle CHAPTER 3 Accounting Cycle Analyze and record the transactions Post the transactions and prepare trial balance Adjust the accounts and prepare trial balance Prepare the financial statements Close the accounts

More information

Chapter 7. Special Journals and Subsidiary Ledgers

Chapter 7. Special Journals and Subsidiary Ledgers 1 Chapter 7 Special Journals and Subsidiary Ledgers 2 Learning objectives 1. Explain the purpose of special journals 2. Explain the purpose of control accounts and subsidiary ledgers 3. Journalize transactions

More information

Adjusting and Closing Entries

Adjusting and Closing Entries Adjusting and Closing Entries Adjusting and Closing entries tend to be difficult to grasp at first. A reason for this might be due to the type of transactions requiring adjustment, which tend to be unfamiliar.

More information

Accumulated Depreciation Equipment

Accumulated Depreciation Equipment Chapter 4 Completing the Accounting Cycle > DO IT! Worksheet Balance sheet: Extend assets to debit column. Extend liabilities to credit column. Extend contra assets to credit column. Extend drawings account

More information

> DO IT! Chapter 3 Adjusting the Accounts. Timing Concepts. Adjusting Entries for Deferrals D-12. Solution

> DO IT! Chapter 3 Adjusting the Accounts. Timing Concepts. Adjusting Entries for Deferrals D-12. Solution Chapter 3 Adjusting the Accounts Timing Concepts Review the glossary terms. Study carefully the revenue recognition principle, the expense recognition principle, and the time period assumption. Several

More information

Chapter 5 Accrual Adjustments and Financial Statement Preparation. Revenue recognition Matching expenses to revenues Expenses related to periods

Chapter 5 Accrual Adjustments and Financial Statement Preparation. Revenue recognition Matching expenses to revenues Expenses related to periods Chapter 5 Accrual Adjustments and Financial Statement Preparation Revenue recognition Matching expenses to revenues Expenses related to periods 1 The Measurement of Income major function of accounting

More information

Module 6 Intro to Adjusting Entries

Module 6 Intro to Adjusting Entries Module 6 Intro to Adjusting Entries Entries required at the end of each accounting period to recognize on accrual basis: Revenues earned for the period Expenses that match the revenue earned And to report

More information

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations:

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: TRANSACTIONS ANALYSIS EXAMPLE Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: 1. Billings to clients for services provided: $350,000

More information

SOLUTIONS. Learning Goal 5

SOLUTIONS. Learning Goal 5 Learning Goal 5: Prepare Adjusting Entries for s S1 Learning Goal 5 Multiple Choice 1. b To record the supplies used up. 2. d To record the amount of revenue earned as time passes. 3. d 4. d Debit an expense,

More information

Adjusting the Accounts

Adjusting the Accounts HOSP 1210 (Financial Acct) Learning Centre Adjusting the Accounts Anytime we prepare financial statements or reach the end of an accounting period, there are account adjustments that need to be made to

More information

Supplement to CHAPTER 3 CLOSING ENTRIES AND THE WORK SHEET

Supplement to CHAPTER 3 CLOSING ENTRIES AND THE WORK SHEET Supplement to CHAPTER 3 CLOSING ENTRIES AND THE WORK SHEET Answers to Review Questions 1. No, the work sheet cannot be used as a substitute for the financial statements. It is a tool used in preparing

More information

CHAPTER 3 ADJUSTING THE ACCOUNTS

CHAPTER 3 ADJUSTING THE ACCOUNTS CHAPTER 3 ADJUSTING THE ACCOUNTS TIME PERIOD ASSUMPTION The time period (or periodicity) assumption assumes that the economic life of a business can be divided into artificial time periods generally a

More information

Accruals and prepayments

Accruals and prepayments 5 Accruals and prepayments this chapter covers... In the last chapter we have looked at the preparation of financial statements or final accounts using the extended trial balance, or spreadsheet, approach.

More information

CHAPTER 3 The Accounting Information System

CHAPTER 3 The Accounting Information System CHAPTER 3 The Accounting Information System 3-1 LECTURE OUTLINE Chapter 3 provides a review of accounting procedures throughout the accounting cycle. Depending on time constraints and students accounting

More information

Accounting Principles Dr. Mishari Alfraih. Adjusting the Accounts

Accounting Principles Dr. Mishari Alfraih. Adjusting the Accounts Accrual- vs. Cash-Basis Accounting Accrual-Basis Accounting Adjusting the Accounts Transactions recorded in the periods in which the events occur Revenues are recognized when earned, rather than when cash

More information

Chapter 4. Completing the accounting cycle

Chapter 4. Completing the accounting cycle 1 Chapter 4 Completing the accounting cycle 2 Learning objectives 1. Prepare an accounting worksheet and describe its purpose 2. Prepare a classified balance sheet and explain the major headings 3. Explain

More information

Accruals, Deferrals,

Accruals, Deferrals, 12-1 McGraw-Hill 2007 The McGraw-Hill Companies, Inc. All rights reserved. Chapter Accruals, Deferrals, 12 and the Worksheet Section 1: Calculating and Recording Adjustments Section Objectives 1. Determine

More information

SOLUTIONS. Learning Goal 16

SOLUTIONS. Learning Goal 16 Learning Goal 16: Prepare Closing Entries S1 Learning Goal 16 Multiple Choice 1. d 2. a 3. b 4. d Because drawing is closed directly into the capital account, not into income summary. 5. c 6. b This a

More information

The Matching Concept and the Adjusting Process

The Matching Concept and the Adjusting Process The Matching Concept and the Adjusting Process o b j e c t i v e s After studying this chapter, you should be able to: 4 Explain how the matching concept relates to the accrual basis of accounting. Explain

More information

Assignment 6: Adjusting Journal Entries and

Assignment 6: Adjusting Journal Entries and Name: Due Date: December 12, 2011 Score: out of a possible 47 Course value: 7.5% Assignment 6: Adjusting Journal Entries and Worksheets A series of transactions are presented and their journal entries

More information

The Adjusting Process

The Adjusting Process Chapter 03.qxd 5/21/08 7:07 PM Page 99 C H A P T E R 3 AP Photo/Jeff Kravitz Fo r Sa le The Adjusting Process M A R V E L D E N T E R T A I N M E N T, N ot o you subscribe to any magazines? Most of us

More information

Closing Entries and the Postclosing Trial Balance

Closing Entries and the Postclosing Trial Balance 6-1 McGraw-Hill 2009 The McGraw-Hill Companies, Inc. All rights reserved. Chapter Closing Entries and the Postclosing Trial Balance 6 Section 1: Closing Entries Section Objectives 1. Journalize and post

More information

EXERCISES. Does not normally require adjustment. Normally requires adjustment (AE).

EXERCISES. Does not normally require adjustment. Normally requires adjustment (AE). EXERCISES Ex. 3 1 1. Prepaid expense 2. Accrued revenue 3. Unearned revenue 4. Accrued expense 5. Unearned revenue 6. Prepaid expense 7. Accrued expense 8. Accrued expense Ex. 3 2 Account Accounts Receivable...

More information

Accounting II Second Semester Final

Accounting II Second Semester Final Name: Class: Date: Accounting II Second Semester Final Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Profit is the difference between:

More information

The Work Sheet and the Closing Process

The Work Sheet and the Closing Process C H A P T E R 4 The Work Sheet and the Closing Process A systematic approach is essential for efficient and accurate processing of large amounts of information. Whether work sheets are on paper or computerized,

More information

Review of Accounting Principles

Review of Accounting Principles Appendix A Review of Accounting Principles Appendix A is a review of basic accounting principles and procedures. Standard accounting procedures are based on the double-entry system. This means that each

More information

Review of the Accounting Process THE BASIC MODEL

Review of the Accounting Process THE BASIC MODEL THE BASIC MODEL The accounting information system is designed to collect and organize data into information that is useful for stakeholders. The Accounting Equation The basic accounting equation is what

More information

The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET. Initial Paid-in Capital. An Example Entity. Transaction 2.

The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET. Initial Paid-in Capital. An Example Entity. Transaction 2. The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET 2001 Richard S. Barr Transaction: Any event that affects the entity's financial position and requires recording Every accounting transaction

More information

Objective Evidence. Unit of Measurement. Accounting Period Cycle. Business Entity. Going Concern. Adequate Disclosure. Matching Expenses with Revenue

Objective Evidence. Unit of Measurement. Accounting Period Cycle. Business Entity. Going Concern. Adequate Disclosure. Matching Expenses with Revenue Accounting Concept: A source document is prepared for each transaction Objective Evidence Accounting Concept: Business transactions are stated in numbers that have common values; that is, using a common

More information

The Pr o f e s s i o n a l La n d l o r d Ho w To

The Pr o f e s s i o n a l La n d l o r d Ho w To The Pr o f e s s i o n a l La n d l o r d Ho w To Providing Property Management Solutions for Over 25 Years Setting up a Loan What follows is one possible way to record a loan and payments of that loan.

More information

ACCT1115. Review Package - Midterm SOLUTION Fall 2013

ACCT1115. Review Package - Midterm SOLUTION Fall 2013 ACCT1115 Review Package - Midterm SOLUTION Fall 2013 Part I Multiple Choice 1) How should you record the purchase of an expensive automobile? a) Decrease cash, increase assets b) Decrease cash, increase

More information

Chapter 5 Accounting for Merchandising Operations

Chapter 5 Accounting for Merchandising Operations Chapter 5 Accounting for Merchandising Operations Purchase Transactions Purchaser records goods at cost. When goods are returned, purchaser reduces Inventory. On September 5, De La Hoya Company buys merchandise

More information

1. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders' equity totals $30,000.

1. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders' equity totals $30,000. Rallis Page 1 Name: _ Date: 1. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders' equity totals $30,000. A) True B) False 2. If total liabilities decreased by

More information

ACCOUNTING LIFEPAC 7 ADJUSTING & CLOSING ENTRIES

ACCOUNTING LIFEPAC 7 ADJUSTING & CLOSING ENTRIES Unit 7 ACCOUNTING LIFEPAC 7 ADJUSTING & CLOSING ENTRIES CONTENTS I. ADJUSTING ENTRIES.............................. 3 The Purpose of the Worksheet....................... 3 The Need for Adjustments..........................

More information

FINANCIAL STATEMENTS-II

FINANCIAL STATEMENTS-II MODULE - 3 15 FINANCIAL STATEMENTS-II You have learnt that Income Statement i.e. Trading & Profit and Loss Account and Position Statement i.e., Balance Sheet are two financial statements, which are prepared

More information

Chapter 4: Accounting Records

Chapter 4: Accounting Records Chapter 4: Accounting Records Structure and terminology of Double Entry Bookkeeping The T account records the effect of transactions under one accounting aspect two opposite effects possible, e.g. inflows

More information

A = L + OE. Transaction 1 Assets = Liabilitites + Owners equity + 1,000,000 Cash + 1,000,000 Common stock

A = L + OE. Transaction 1 Assets = Liabilitites + Owners equity + 1,000,000 Cash + 1,000,000 Common stock FINANCIAL STATEMENT ANALYSIS Henry Jarva Aalto University, Spring 2015 Student name: EXERCISE 1. Provide journal entries for Transactions 5 8, Adjusting Entries 2 7, and prepare Exhibit 1. 2. Calculate

More information

The worksheet for Hancock Company shows the following in the financial statement

The worksheet for Hancock Company shows the following in the financial statement Chapter 4 Do it! Susan Elbe is preparing a worksheet. Explain to Susan how she should extend the following adjusted trial balance accounts to the financial statement columns of the worksheet. Cash Accumulated

More information

ILLUSTRATION 3-1 DOUBLE-ENTRY ACCOUNTING SYSTEM

ILLUSTRATION 3-1 DOUBLE-ENTRY ACCOUNTING SYSTEM ILLUSTRATION 3-1 DOUBLE-ENTRY ACCOUNTING SYSTEM ASSETS Increase Decrease + DOUBLE-ENTRY ACCOUNTING REAL (PERMANENT) ACCOUNTS = LIABILITIES + Rules of Thumb + If the "normal balance" for an account is a

More information

Basic Accounting Principles

Basic Accounting Principles Basic Accounting Principles Basic Accounting Model The basic accounting model represents the relationship between assets (what the company owns), liabilities (what the company owes), and owner s equity

More information

THE ACCOUNTING INFORMATION SYSTEM

THE ACCOUNTING INFORMATION SYSTEM CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM OVERVIEW Accounting information must be accumulated and summarized before it can be communicated and analysed. In this chapter, we will discuss the steps involved

More information

Self-test Comprehensive Problems II 综 合 自 测 题 II

Self-test Comprehensive Problems II 综 合 自 测 题 II Self-test Comprehensive Problems II 综 合 自 测 题 II Part One (30%) 1. Give the Chinese/English of the following terms: (5%) subsidiary ledger 统 制 账 户 purchase requisition 现 金 溢 缺 petty cash fund 永 续 盘 存 制

More information

CHAPTER 4. Adjusting the accounts and preparing financial statements CONTENTS

CHAPTER 4. Adjusting the accounts and preparing financial statements CONTENTS CHAPTER 4 Adjusting the accounts and preparing financial statements CONTENTS Demonstration problem 4.1 Adjusting entries and corrections 4.2 Adjusting centries and effect on financial statements 4.3 Adjusting

More information

ILLUSTRATION 21-1 BASIC FEATURES AND TYPES OF PENSION PLANS. (defined). in the future is a computation.

ILLUSTRATION 21-1 BASIC FEATURES AND TYPES OF PENSION PLANS. (defined). in the future is a computation. ILLUSTRATION 21-1 BASIC FEATURES AND TYPES OF PENSION PLANS Defined Contribution Plan The amounts of the contributions are known (defined). No promise regarding size of benefits. Defined Benefits Plan

More information

BAT 4M: Chapter 3 ANSWERS TO QUESTIONS

BAT 4M: Chapter 3 ANSWERS TO QUESTIONS BAT 4M: Chapter 3 ANSWERS TO QUESTIONS 01. (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods, and its

More information

COMPONENTS OF THE STATEMENT OF CASH FLOWS

COMPONENTS OF THE STATEMENT OF CASH FLOWS ILLUSTRATION 24-1 OPERATING, INVESTING, AND FINANCING ACTIVITIES COMPONENTS OF THE STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES + Sales and Service Revenue Received Cost of Sales Paid Selling

More information

Study Guide - Final Exam Accounting I

Study Guide - Final Exam Accounting I Study Guide - Final Exam Accounting I True/False Indicate whether the sentence or statement is true or false. 1. Entries in a sales journal affect account balances in both the accounts receivable ledger

More information

Chapter 8. Describe an effective accounting information system. Learning Objectives. Objective 1. Accounting Information Systems

Chapter 8. Describe an effective accounting information system. Learning Objectives. Objective 1. Accounting Information Systems PowerPoint to accompany Chapter 8 Accounting Information Systems Learning Objectives 1. Describe an effective accounting information system 2. Understand both computerised and manual accounting systems

More information

SMART TOUCH LEARNING Balance Sheet May 31, 2013 $ 4,800. $ 48,700 Accounts receivable 2,600. 900 Inventory 30,500. 100 Supplies.

SMART TOUCH LEARNING Balance Sheet May 31, 2013 $ 4,800. $ 48,700 Accounts receivable 2,600. 900 Inventory 30,500. 100 Supplies. 3 The Adjusting Process Are these balances correctly showing everything the company OWNS? SMART TOUCH LEARNING ance Sheet May 31, 2013 Are these balances correctly showing everything the company OWES?

More information

CHAPTER 12 ACCRUALS, DEFERRALS, AND THE WORKSHEET

CHAPTER 12 ACCRUALS, DEFERRALS, AND THE WORKSHEET CHAPTER 12 ACCRUALS, DEFERRALS, AND THE WORKSHEET Chapter Opener: Thinking Critically Students may assess that an unexpected decline in sales would mean surplus inventory which would have to be reduced

More information

CHAPTER 22. Liabilities CONTENTS

CHAPTER 22. Liabilities CONTENTS CHAPTER 22 Liabilities CONTENTS 22.1 Journal entries for various liabilities 22.2 Journal entries for employee entitlements 22.3 Provision for warranty claim expenses 22.4 Finance of an asset purchase

More information

ACC 211/212: Double Entry Logs

ACC 211/212: Double Entry Logs ACC 211/212: Double Entry Logs Journal Entries: o Credits are always indented (account name and value). o The sum of debits will always equal the sum of credits. o The month name is required only for the

More information

Student Solutions Manual to Accompany. Introduction to Financial Accounting. David Annand. Based on International Financial Reporting Standards

Student Solutions Manual to Accompany. Introduction to Financial Accounting. David Annand. Based on International Financial Reporting Standards Student Solutions Manual to Accompany Introduction to Financial Accounting Based on International Financial Reporting Standards David Annand Copyright 2014 David Annand Published by David Annand 4910C

More information

Adjusting Accounts and Preparing Financial Statements

Adjusting Accounts and Preparing Financial Statements wil79549_ch03_0090-0133 07/30/2008 5:36 pm Page 90 pinnacle 201:MHBR055:mhwiL19:wiL19ch03: A Look Back Chapter 2 explained the analysis and recording of transactions. We showed how to apply and interpret

More information

Accrual vs Deferral Accrual vs Cash Basis

Accrual vs Deferral Accrual vs Cash Basis 1 - Accrual vs Deferral Accrual vs Cash Basis - understanding debits and credits a transaction either increases or decreases the balance of accounts. increases and decreases in accounts are based on the

More information

Sample Test for entrance into Acct 3110 and Acct 3310

Sample Test for entrance into Acct 3110 and Acct 3310 Sample Test for entrance into Acct 3110 and Acct 3310 1. Which of the following financial statements could properly have the following in the date line: For the Year Ended December 31, 2010"? a. Balance

More information

CHAPTER 3: PREPARING FINANCIAL STATEMENTS

CHAPTER 3: PREPARING FINANCIAL STATEMENTS CHAPTER 3: PREPARING FINANCIAL STATEMENTS I. TIMING AND REPORTING A. The Accounting Period Time period assumption an organization s activities can be divided into specific time periods. Examples: a month,

More information

CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS. Lecture Outline

CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS. Lecture Outline CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS Overview Chapter 1 explained that the primary means of conveying financial information to investors, creditors, and other external users is through financial

More information

CHAPTER 2 ACCOUNTING FOR TRANSACTIONS

CHAPTER 2 ACCOUNTING FOR TRANSACTIONS CHAPTER 2 ACCOUNTING FOR TRANSACTIONS Key Terms and Concepts to Know Double entry accounting: Debits and Credits Total debits must always equal total credits Accounting Books: Accounts General Journal

More information

Chapter 3: Double-Entry Bookkeeping

Chapter 3: Double-Entry Bookkeeping Chapter 3: Double-Entry Bookkeeping Double-entry bookkeeping underpins accounting A way of systematically recording the financial transactions of a company so that each transaction is recorded twice. Basic

More information

Chapter 5. Accounting for merchandising operations. Appendix 5A: Periodic inventory system

Chapter 5. Accounting for merchandising operations. Appendix 5A: Periodic inventory system 1 Chapter 5 Accounting for merchandising operations Appendix 5A: Periodic inventory system 2 Learning objectives 1. Record purchase and sales transactions under the periodic inventory system 2. Prepare

More information

CHAPTER II GENERAL LEDGER ACCOUNTS

CHAPTER II GENERAL LEDGER ACCOUNTS CHAPTER II GENERAL LEDGER ACCOUNTS A general ledger is basic to an accounting system. The General Ledger of a fund is a summary record containing the balance of assets, liabilities, deferred revenues,

More information

Accrual accounting ACCRUAL VERSUS CASH BASIS OF ACCOUNTING. ACCRUAL VERSUS CASH BASIS OF ACCOUNTING continued. Chapter 3

Accrual accounting ACCRUAL VERSUS CASH BASIS OF ACCOUNTING. ACCRUAL VERSUS CASH BASIS OF ACCOUNTING continued. Chapter 3 Chapter 3 Accrual accounting concepts PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd ACCRUAL VERSUS CASH BASIS OF ACCOUNTING Accrual-based accounting

More information

CHAPTER 4 The Mechanics of Financial Accounting

CHAPTER 4 The Mechanics of Financial Accounting CHAPTER 4 The Mechanics of Financial Accounting SYNOPSIS This chapter covers the mechanics underlying preparation of financial statements and how they help to ensure that a company s transactions are accurately

More information

CHAPTER 4 Accrual Accounting Concepts Study Objectives

CHAPTER 4 Accrual Accounting Concepts Study Objectives CHAPTER 4 Accrual Accounting Concepts Study Objectives Explain the revenue recognition principle and the matching principle. Differentiate between the cash basis and the accrual basis of accounting. Explain

More information

MIDTERM EXAMINATION. Afaaq_tariq@yahoo.com. Fall 2009

MIDTERM EXAMINATION. Afaaq_tariq@yahoo.com. Fall 2009 MIDTERM EXAMINATION Afaaq_tariq@yahoo.com Fall 2009 FIN621- Financial Statement Analysis Asslam O Alikum FIN621- Financial Statement Analysis (Session 3) solved by Afaaq n Shani Bhai with reference n numerical

More information

Dutchess Community College ACC 204 Managerial Accounting Quiz Prep Chapter 2

Dutchess Community College ACC 204 Managerial Accounting Quiz Prep Chapter 2 Dutchess Community College ACC 204 Managerial Accounting Quiz Prep Chapter 2 Job Order Cost Accounting Peter Rivera January 2010 Disclaimer This Quiz Prep is provided as an outline of the key concepts

More information

Chapter 4: Transactions to General Ledger Chapter Review Solutions

Chapter 4: Transactions to General Ledger Chapter Review Solutions Introductory Accounting - Accounting to Trial Balance Chapter 4: Transactions to General Ledger Chapter Review Solutions 2. Invoice: A bill charging a customer for goods supplied or service provided on

More information

William B. Pollard, Appalachian State University, Boone, NC 28608, pollardwb@appstate.edu INTRODUCTION

William B. Pollard, Appalachian State University, Boone, NC 28608, pollardwb@appstate.edu INTRODUCTION TEACHING PRINCIPLES OF ACCOUNTING: HELPING STUDENTS IDENTIFY TEN DIFFERENCES WHEN COMPARING A TRIAL BALANCE, AN ADJUSTED TRIAL BALANCE AND A BALANCE SHEET William B. Pollard, Appalachian State University,

More information

Periodicity Assumption... Time Period Assumption... Chapter 4 Accrual Accounting Concepts

Periodicity Assumption... Time Period Assumption... Chapter 4 Accrual Accounting Concepts Financial Accounting: Tools for Business Decision Making, 4th Ed. CHAPTER 4 Kimmel, Weygandt, Kieso Chapter 4 Accrual Accounting Concepts KEY THINGS WE LL DO: Refresh and expand Ch.3 concepts. Differentiate

More information

Accounts of the sole trader

Accounts of the sole trader Unit 1 Accounts of the sole trader This unit consists of one section only: Section 1: Final accounts Section 1 Final accounts By the end of this section you should be able to: explain the position of a

More information

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives Chapter 1 Starting A Proprietorship: Changes that Affect the Accounting Equation After studying Chapter 1, you will be able to: 1. Define accounting

More information

The General Journal and the General Ledger

The General Journal and the General Ledger 4-1 McGraw-Hill 2009 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 The General Journal and the General Ledger Section 1: The General Journal Section Objectives 1. Record transactions in

More information

COMPLETING THE ACCOUNTING CYCLE

COMPLETING THE ACCOUNTING CYCLE 4 COMPLETING THE ACCOUNTING CYCLE objectives After studying this chapter, you should be able to: Review the seven basic steps of the accounting cycle. Prepare a work sheet. Prepare financial statements

More information

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Page 1 of 27 Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Overview In Module 2 you studied the fundamental steps in recording accounting information by

More information

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Course Schedule Course Modules Review and Practice Exam Preparation Resources Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Overview In Module 2 you studied

More information

The learners shall be able to

The learners shall be able to Grade: 12 Course Title: Fundamentals of Accountancy, Business and Management 2 Semester: 1 st Semester, 1 st Quarter No. of Hours/ Semester: 80 hours/ semester Prerequisite: Fundamentals of Accountancy,

More information

UNIVERSITY OF WATERLOO School of Accounting and Finance

UNIVERSITY OF WATERLOO School of Accounting and Finance UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Duane Kennedy Mid-Term Examination Fall 2008 Date and Time: October 16, 2008, 7:15 8:45pm Pages: 16, including cover Name: Student

More information

Accounting Basics. (Explanation)

Accounting Basics. (Explanation) Accounting Basics (Explanation) Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Introduction to Accounting

More information

PART A: TRUE/FALSE (1 point each):

PART A: TRUE/FALSE (1 point each): CHABOT COLLEGE General Accounting (BUS-7) Dmitriy Kalyagin PART A: TRUE/FALSE (1 point each): EXAM #4 (Chapters 10, 12, 13) 1. Employees who are exempt from the FLSA are entitled for overtime pay for hours

More information

TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.9 : Prepayments

TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.9 : Prepayments TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.9 : Prepayments STATEMENT OF INTENT Accurate recording of prepayments allows costs to be apportioned over more than one reporting period rather than

More information

SAMPLE QUESTION PAPER IN ACCOUNTANCY. Time: Three Hours Maximum Marks: 100

SAMPLE QUESTION PAPER IN ACCOUNTANCY. Time: Three Hours Maximum Marks: 100 SAMPLE QUESTION PAPER IN ACCOUNTANCY Time: Three Hours Maximum Marks: 100 Note: The question paper is divided into two sections A and B. Attempt all questions of Section A and any one question of Section

More information

RECORDING OF TRANSACTIONS (JOURNAL ENTRIES, LEDGER AND TRIAL BALANCE)

RECORDING OF TRANSACTIONS (JOURNAL ENTRIES, LEDGER AND TRIAL BALANCE) Source Document : RECORDING OF TRANSACTIONS (JOURNAL ENTRIES, LEDGER AND TRIAL BALANCE) A document which provides evidence of the transactions is called the Source Document such as Cash memo, Invoice etc.

More information

Basic Concepts of Accounting Subsidiary Subsidiary Special Special Inform Infor a m tion Ledgers Ledger Journals Jour Systems

Basic Concepts of Accounting Subsidiary Subsidiary Special Special Inform Infor a m tion Ledgers Ledger Journals Jour Systems COMPUTERIZED ACCOUNTING SYSTEMS Basic Concepts of Accounting Information Systems Subsidiary Ledgers Special Journals Computerized accounting systems Manual accounting systems Example Advantages Sales journal

More information

Accounting 300A-10A The Operating Cycle: Worksheet/Closing Entries Page 1

Accounting 300A-10A The Operating Cycle: Worksheet/Closing Entries Page 1 Accounting 3A-1A The Operating Cycle: Worksheet/Closing Entries Page 1 THE WORKSHEET and CLOSING ENTRIES I. Review of Key Concepts and Terms: A. The purpose of the worksheet 1. To show that the accounts

More information

Chapter 5: Adjustments and the Worksheet

Chapter 5: Adjustments and the Worksheet Chapter 5: Adjustments and the Worksheet Chapter Opener: Thinking Critically Students should suggest that accountants estimate the amount of wear and tear on the equipment. This expense should be charged

More information

Welcome to the financial reports topic. 5-1-1

Welcome to the financial reports topic. 5-1-1 Welcome to the financial reports topic. 5-1-1 We will explore the effect of standard processes in SAP Business One on Financial Reports: such as the Balance Sheet, the Trial Balance, and the Profit and

More information

Chapter 6 Statement of Cash Flows

Chapter 6 Statement of Cash Flows Chapter 6 Statement of Cash Flows The Statement of Cash Flows describes the cash inflows and outflows for the firm based upon three categories of activities. Operating Activities: Generally include transactions

More information