AccountingBasics英语会计基础教学课件

AMonday11:3041-203BMonday15:3019-G006CWednesday12:3019-2043DThursday9:3019-G006EThursday12:3019-2085FFriday12:3019-G007Don’tforgetyour

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InAutumn2011,studentswhoregularly*attendedPASSscored11markshigheronaveragethannon-attendingstudents.StudentswhodidnotattendPASSwerealso5timesaslikelytofail.AMonday11:3041-203BMonday15:30Chapter3:AdjustingtheaccountsWeek32Chapter3:AdjustingtheaccouBEFOREWESTART….DAX=CILDIVIDENDSASSETSEXPENSESCAPITAL(EQUITY)INCOMELIABILITIESC=CREDITD=DEBITNormalbalanceoftheseaccountsisadebit.Toincreasebalancedebitagain,todecreasecreditoutoftheaccount.Normalbalanceoftheseaccountsisacredit.Toincreasebalancecreditagain,todecreasedebitoutoftheaccount.BEFOREWESTART….DAX=CILBeforewestart…4DRD+A+X=C+I+LCRWhatisthenormalbalanceof…Accountsreceivable?Accountspayable?Machinery?Taxexpense?Dividends/Drawings?Sharecapital?Retainedearnings?Salesrevenue?Beforewestart…4DRD+A+X=C+I+LBeforewestart…Lastweekwelookedattransactionsanalysis,journalentriesandgeneralledgeraccounts…ElenaLeeexample5BasicanalysisDebit-creditanalysisTransaction1October,officerentforOctoberispaidincash,$1800TheexpenseRentisincreased$1800becausethepaymentpertainsonlytothecurrentmonth;theassetCashisdecreased$1800Debitsincreaseexpenses:debitRentExpense$1800Creditsdecreaseassets:creditCash$1800Beforewestart…LastweekwelBeforewestart…6JournalentryPostingDebit-creditanalysisDebitsincreaseexpenses:debitRentExpense$1800Creditsdecreaseassets:creditCash$1800Oct1RentExpense6011800Cash 1011800 (PaidOctoberrent)Cash101Oct1800RentExpense601Oct11800Beforewestart…6JournalentryThisweek…7AccrualversuscashbasisofaccountingRevenuerecognitioncriteriaExpenserecognitioncriteriaTypesofadjustingentriesPrepaymentsAccrualsAdjustedtrialbalanceWorksheetsFinancialstatementsfromworksheetsThisweek…7AccrualversuscasAccrualversuscashbasisofaccountingCash-basedaccountingAccrual-basedaccounting8Revenuerecognisedwhenthecashisreceivedorpaid.ExpensesrecognisedwhenthecashisreceivedorpaidRevenuerecognisedwhengoodsandservicesareprovidedExpensesrecognisedwhenassetsareconsumedorliabilitiesincurredAccrualversuscashbasisofaCashversusaccrualbasis9AccrualbasisIncomeexample:assumePennyreceived$20,000incashforsalesduring2011andchargedclients$2,400whichwastobepaidinthefollowingyear.

HowmuchrevenueshouldPennyrecordfor2011? Revenuefor2010wouldbe $22,400Why? Sales–Cash $20,000 Sales–Accountsreceivable $2,400 Totalsalesfor2011 $22,400Cashversusaccrualbasis9AccrCashversusaccrualbasis10AccrualbasisExpensesexample:Penny’sphonebillforMarchwas$400butshedoesn’treceivethebilluntilApril.WhenshouldPennyrecordthetelephoneexpense?The$400isstillaMarchexpensebecausethisistheperiodinwhichtheexpensewasincurred.Theactualcashwon’tgooutuntilApril,buttheexpenseisstillaMarchexpense.Cashversusaccrualbasis10AccWhydoweneedadjustingentries?11It’satimingissueandrelatedtotheperiodassumption.BecausesometimestransactionseffecttwoormoreaccountingperiodsweneedtomakesureincomeandexpensesarerecordedinthecorrectperiodWeneedtomakesurethatassetandliabilitybalancesareaccuratelyreflectedattheendoftheaccountingperiodAdjustingentriesoccurafterthetransactionshavebeenrecordedandposted,butbeforethefinancialstatementsarepreparedWhydoweneedadjustingentriTypesofadjustingentries12PREPAYMENTSPrepaidexpensesCosts/expensespaidforbeforetheyareconsumed,e.g.rentinadvanceInitiallyrecordedasassetsandchargedtoexpensesinsubsequentperiodsastheyareconsumedUnearnedrevenuesRevenuewhichhasbeenreceivedbutnotyetearned,e.g.concerttickets,magazinesubscriptionsInitiallyrecordedasliabilitiesandrecognisedasrevenueinsubsequentperiodsastherevenueisearnedTypesofadjustingentries12PTypesofadjustingentries13ACCRUALSAccruedexpensesCosts/expensesincurredbutnotyetpaidfor…e.g…Wagesearnedbyemployeesbutnotyetpaidattheendoftheaccountingperiod.Electricitybills,phonebillsthathaven’tcomeinthemaileventhoughtheyarepartoftheexpensesoftheaccountingperiod.AccruedrevenuesRevenuewhichhasbeenearnedbutnotyetreceivedincash…e.g…SalescommissionsearnedbutnotyetpaidInterestaccumulatedbutnotyetreceivedTypesofadjustingentries13ACAdjustingentries…14Onesideoftheadjustingjournalentryaffectsanaccountreportedintheincomestatement(ierevenueorexpense)andtheothersideoftheentryaffectsanaccountrecordedinthebalancesheet(assetorliability)ThecashaccountisneveradjustedbecausethecashflowoccursbeforeorafterthereportingdateAdjustingentries…14OnesideoAnexample:BazingaInc15BazingaIncisacomicbookstoreinPasadena,California.Itisownedandmanagedbyfourfriends:Sheldon,Leonard,Howard,andRaj.TheTrialBalanceasatJune2010forthecompany,beforeadjustingentriesaremade,isshownonthefollowingslide…Anexample:BazingaInc15Bazin1616Anexample:BazingaInc,yearendinfoWhendoingadjustingentries,youwillneedtodeterminewhatinformationisavailableattheendoftheaccountingperiodsothatyoucancalculatethecorrectbalancesforassetsandliabilityaccountsanddeterminetheamountstobeincludedasrevenueandexpenses.InACCY901,thistypeofinformationwillbegiventoyou.(a)Suppliesonhandattheendoftheperiodwere$8,000(b)Theusefullifeofshopfittingswas5yearsandtheresidualvalueis$5,000.(c)Athreeyearinsurancepolicywaspurchasedon1July2009.(d)Thebusinessemploysonesalesassistantwhoispaid$1,000forafivedayworkingweekandispaideveryFriday.BalancedayisaWednesday.(e)Comicbooksworth$3,500weresenttoacollectorwithaninvoiceon29June2010.(f)Thesubscriptionrevenuerecordedintheunearnedrevenueaccountwereforatwo-yearperiod,thereforehalfofthismoneywasearnedatyearend17Anexample:BazingaInc,year(a)Suppliesonhandattheend

oftheperiodwere$8,000Typeofadjustingentry~prepayment~costpaidforbeforeconsumedIntheunadjustedtrialbalance,suppliesatthebeginningoftheperiodwere$12,500Therefore,anadjustingentryisrequiredtoreducethebalanceto$8,000DateDescriptionDebitCredita30/6SuppliesexpenseSupplies(toreducesuppliesaccountto$8000)(a)Suppliesonhandattheen(b)Theusefullifeofshopfittingswas

5yearsandtheresidualvalueis$5,000.Typeofadjustingentry~prepayment~depreciationAdjustingentryfordepreciationexpense…Annualdepreciationexpense=(cost–residualvalue)/estimatedusefullifeAnnualdepreciationexpense=($15,000-$5,000)/5yearsDateDescriptionDebitCreditb30/06Depexp–fittingsAccumdep–fittings(torecorddepexpensefortheyear)(b)Theusefullifeofshopfi(c)Athreeyearinsurancepolicywaspurchasedon1July2009.Typeofadjustingentry~prepayment~prepaidexpenseInsurancepolicypurchasedatthebeginningofthecurrentyear.Validforthreeyears.Adjustingentryrecordsexpirationofpolicyoverthisperiod.DateDescriptionDebitCreditc30/06InsuranceexpensePrepaidinsurance(torecordinsuranceexpensefortheyear)(c)Athreeyearinsurancepol(d)Thebusinessemploysonesalesassistantwhoispaid

$1,000forafivedayworkingweekandispaideveryFriday.BalancedayisaWednesday.Typeofadjustingentry~accrual~unrecordedexpensesWorkout:howmuchispaidperdayANDhowmanydaysfallbetweendateoflastpayandbalancedate.DateDescriptionDebitCreditd30/06SalaryexpenseSalariespayable(torecordsalariesowedbutnotyetpaid)(d)Thebusinessemploysones(e)Comicbooksworth$3,500weresenttoa

collectorwithaninvoiceon29June2010.Typeofadjustingentry~accrual~unrecordedrevenueAdjustingentryforunrecordedrevenue…DateDescriptionDebitCredite30/06

(torecordrevenueearnedbutnotyetreceived)(e)Comicbooksworth$3,500w(f)Thesubscriptionrevenuerecordedinthe

unearnedrevenueaccountwereforatwo-yearperiod,

thereforehalfofthismoneywasearnedatyearendTypeofadjustingentry~deferral~unearnedrevenueAdjustingentryforunearnedrevenuenowearnedDateDescriptionDebitCreditf30/06

(torecordunearnedrevenueearnedduringtheyear)(f)ThesubscriptionrevenuerAnexample:BazingaInc24Onceadjustingentriesarepostedtoledgeraccounts,newtotalsarecalculatedandanadjustedtrialbalanceistakenAftertheadjustingprocessiscompleted,theadjustedtrialbalanceisusedtopreparethefinancialstatementsWewilluseworksheetstohelpuswiththisprocessAnexample:BazingaInc24OnceUsingaworksheet…25Whyuseaworksheet?IthelpstocompiletheinformationnecessaryforthepreparationofthefinancialstatementsThebalancesofledgeraccountsappearinonelocationTheaffectofadjustmentscanbeviewedeasilyandcorrectedifnecessaryBecausetheadjustedtrialbalanceiseasilyvisible,theworksheetcansimplifythepreparationoffinancialstatementsUsingaworksheet…25WhyuseaWhatdoesaworksheetlooklike?26WhatdoesaworksheetlooklikAnexample:BazingaInc27Oncetheadjustmentsareentered,theadjustedbalancesareextendedtotheappropriatecolumnsintheadjustedtrialbalance.ExpensesdebitcolumnRevenuecreditcolumnAssetsanddividends/drawingsdebitcolumnsLiabilities,equity,contraassetscreditcolumnsAnexample:BazingaInc27Once2828Anexample:BazingaInc29Finally,theamountsintheadjustedtrialbalanceareenteredintheincomestatementandbalancesheetcolumns.Expenses=debitcolumnofincomestatementRevenue=creditcolumnofincomestatementAssetsanddividends/drawings=debitcolumnofbalancesheetLiabilities,equity,contraassets=creditcolumnofbalancesheetThesecolumnsarethenusedtopreparethefinancialstatementsAnexample:BazingaInc29Final3030Incomestatementfromworksheet31IncomestatementfromworksheeStatementofchangesinequity32Retainedearnings,beginning21,500

Add:netprofit24,150

45,650

Less:dividends-

Retainedearnings,30June201045,650

BazingaIncStatementofChangesinEquityfortheyearended30June2010StatementofchangesinequityBalancesheetfromworksheet33Balancesheetfromworksheet33Chapter4:CompletionoftheaccountingcycleWeek334Chapter4:CompletionoftheaClosingentriesTomaketheaccountsreadyforthenextaccountingperiod,thebooksmustbeclosed.UnderstandthedifferencebetweenTemporary(ornominal)accountsPermanent(orreal)accountsTemporaryaccountsincludealltheincomestatementaccountsanddividend/drawingaccountsthatareusefulforoneperiodonly(todetermineprofitfortheyear).Theseaccountsareclosedattheendoftheyear.Permanentaccountsincludeallbalancesheetaccountsandrelatetooneormoreaccountingperiods.Theseaccountsarenotclosed.

35ClosingentriesTomaketheaccPreparingclosingentriesClosingentries

Formallytransferprofitorlossandowner’sdrawingsordividendstoowner’scapitalProduceazerobalanceineachtemporaryaccountProfitandLossSummaryThisisanothertemporaryaccountwhichisusedtohelpwiththeclosingprocessThisaccountisalsoclosed(examplecoming!)36PreparingclosingentriesClosiTheclosingprocess1CloserevenueaccountstoProfitandLossSummary2CloseexpensesaccountstoProfitandLossSummary37(Individual)RevenueProfitandLossSummary(Individual)Expenses12Theclosingprocess1CloserevTheclosingprocesscontinued3CloseProfit&LossSummarytoRetainedearnings38ProfitandLossSummaryRetainedearnings3Theclosingprocesscontinued3Theclosingprocesscontinued4CloseDividendstoRetainedearnings39RetainedearningsDividends4Theclosingprocesscontinued4ClosingEntriesIllustrated:BazingaInc40

GENERALJOURNAL J3DateAccounttitlesandexplanations Ref. Debit Credit2010June30 SalesRevenue 32250 Profit&LossSummary 32250 (Tocloseincomeaccount)30 Profit&LossSummary 8100 SuppliesExpense 4500 DepreciationExpense-fittings 2000 InsuranceExpense 1000 SalariesExpense 600 (Tocloseexpenseaccounts)30 Profit&LossSummary 24150 Retainedearnings 24150 (TocloseProfitandLossSummaryaccountand transferprofittoRetainedEarnings) IFTHEREHADBEENADIVIDENDPAID… 30 Retainedearnings 500 Dividends 500 (Toclosedividendsandrecognisedecreaseinretainedearnings)1234ClosingEntriesIllustrated:BPostclosingentriesTemporaryaccountsAllwillhavezerobalancesafterpostingtheclosingentriesAllrevenueandexpenseaccountsaretotalled,balancedanddouble-ruledRetainedearningsBalancerepresentstotalretainedearningsatendofaccountingperiodNoentriesarejournalisedandpostedtoretainedearningsduringtheyearPermanentaccounts

Notclosed(assets,liabilities,equity)41PostclosingentriesTemporaryPreparingapost-closingtrialbalanceApost-closingtrialbalanceisalistofallpermanentaccountsandtheirbalancesafterclosingentriesarejournalisedandpostedThepurposeofthepost-closingtrialbalanceistoprovetheequalityofthepermanentaccountsthatarecarriedforwardtothenextaccountingperiod42Preparingapost-closingtrialPreparingapost-closingtrialbalance

continued43Preparingapost-closingtrialSUMMARYOFTHEACCOUNTINGCYCLEAnalysebusinesstransactionsJournalisethetransactionsPosttoledgeraccountsPrepareatrialbalanceJournaliseandpostadjustingentries:prepayments/accrualsPrepareanadjustedtrialbalancePreparefinancialstatementsIncomestatementStatementofchangesinequityStatementoffinancialpositionJournaliseandpostclosingentriesPrepareapost-closingtrialbalance44SUMMARYOFTHEACCOUNTINGCYCLAMonday11:3041-203BMonday15:3019-G006CWednesday12:3019-2043DThursday9:3019-G006EThursday12:3019-2085FFriday12:3019-G007Don’tforgetyour

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InAutumn2011,studentswhoregularly*attendedPASSscored11markshigheronaveragethannon-attendingstudents.StudentswhodidnotattendPASSwerealso5timesaslikelytofail.AMonday11:3041-203BMonday15:30Chapter3:AdjustingtheaccountsWeek346Chapter3:AdjustingtheaccouBEFOREWESTART….DAX=CILDIVIDENDSASSETSEXPENSESCAPITAL(EQUITY)INCOMELIABILITIESC=CREDITD=DEBITNormalbalanceoftheseaccountsisadebit.Toincreasebalancedebitagain,todecreasecreditoutoftheaccount.Normalbalanceoftheseaccountsisacredit.Toincreasebalancecreditagain,todecreasedebitoutoftheaccount.BEFOREWESTART….DAX=CILBeforewestart…48DRD+A+X=C+I+LCRWhatisthenormalbalanceof…Accountsreceivable?Accountspayable?Machinery?Taxexpense?Dividends/Drawings?Sharecapital?Retainedearnings?Salesrevenue?Beforewestart…4DRD+A+X=C+I+LBeforewestart…Lastweekwelookedattransactionsanalysis,journalentriesandgeneralledgeraccounts…ElenaLeeexample49BasicanalysisDebit-creditanalysisTransaction1October,officerentforOctoberispaidincash,$1800TheexpenseRentisincreased$1800becausethepaymentpertainsonlytothecurrentmonth;theassetCashisdecreased$1800Debitsincreaseexpenses:debitRentExpense$1800Creditsdecreaseassets:creditCash$1800Beforewestart…LastweekwelBeforewestart…50JournalentryPostingDebit-creditanalysisDebitsincreaseexpenses:debitRentExpense$1800Creditsdecreaseassets:creditCash$1800Oct1RentExpense6011800Cash 1011800 (PaidOctoberrent)Cash101Oct1800RentExpense601Oct11800Beforewestart…6JournalentryThisweek…51AccrualversuscashbasisofaccountingRevenuerecognitioncriteriaExpenserecognitioncriteriaTypesofadjustingentriesPrepaymentsAccrualsAdjustedtrialbalanceWorksheetsFinancialstatementsfromworksheetsThisweek…7AccrualversuscasAccrualversuscashbasisofaccountingCash-basedaccountingAccrual-basedaccounting52Revenuerecognisedwhenthecashisreceivedorpaid.ExpensesrecognisedwhenthecashisreceivedorpaidRevenuerecognisedwhengoodsandservicesareprovidedExpensesrecognisedwhenassetsareconsumedorliabilitiesincurredAccrualversuscashbasisofaCashversusaccrualbasis53AccrualbasisIncomeexample:assumePennyreceived$20,000incashforsalesduring2011andchargedclients$2,400whichwastobepaidinthefollowingyear.

HowmuchrevenueshouldPennyrecordfor2011? Revenuefor2010wouldbe $22,400Why? Sales–Cash $20,000 Sales–Accountsreceivable $2,400 Totalsalesfor2011 $22,400Cashversusaccrualbasis9AccrCashversusaccrualbasis54AccrualbasisExpensesexample:Penny’sphonebillforMarchwas$400butshedoesn’treceivethebilluntilApril.WhenshouldPennyrecordthetelephoneexpense?The$400isstillaMarchexpensebecausethisistheperiodinwhichtheexpensewasincurred.Theactualcashwon’tgooutuntilApril,buttheexpenseisstillaMarchexpense.Cashversusaccrualbasis10AccWhydoweneedadjustingentries?55It’satimingissueandrelatedtotheperiodassumption.BecausesometimestransactionseffecttwoormoreaccountingperiodsweneedtomakesureincomeandexpensesarerecordedinthecorrectperiodWeneedtomakesurethatassetandliabilitybalancesareaccuratelyreflectedattheendoftheaccountingperiodAdjustingentriesoccurafterthetransactionshavebeenrecordedandposted,butbeforethefinancialstatementsarepreparedWhydoweneedadjustingentriTypesofadjustingentries56PREPAYMENTSPrepaidexpensesCosts/expensespaidforbeforetheyareconsumed,e.g.rentinadvanceInitiallyrecordedasassetsandchargedtoexpensesinsubsequentperiodsastheyareconsumedUnearnedrevenuesRevenuewhichhasbeenreceivedbutnotyetearned,e.g.concerttickets,magazinesubscriptionsInitiallyrecordedasliabilitiesandrecognisedasrevenueinsubsequentperiodsastherevenueisearnedTypesofadjustingentries12PTypesofadjustingentries57ACCRUALSAccruedexpensesCosts/expensesincurredbutnotyetpaidfor…e.g…Wagesearnedbyemployeesbutnotyetpaidattheendoftheaccountingperiod.Electricitybills,phonebillsthathaven’tcomeinthemaileventhoughtheyarepartoftheexpensesoftheaccountingperiod.AccruedrevenuesRevenuewhichhasbeenearnedbutnotyetreceivedincash…e.g…SalescommissionsearnedbutnotyetpaidInterestaccumulatedbutnotyetreceivedTypesofadjustingentries13ACAdjustingentries…58Onesideoftheadjustingjournalentryaffectsanaccountreportedintheincomestatement(ierevenueorexpense)andtheothersideoftheentryaffectsanaccountrecordedinthebalancesheet(assetorliability)ThecashaccountisneveradjustedbecausethecashflowoccursbeforeorafterthereportingdateAdjustingentries…14OnesideoAnexample:BazingaInc59BazingaIncisacomicbookstoreinPasadena,California.Itisownedandmanagedbyfourfriends:Sheldon,Leonard,Howard,andRaj.TheTrialBalanceasatJune2010forthecompany,beforeadjustingentriesaremade,isshownonthefollowingslide…Anexample:BazingaInc15Bazin6016Anexample:BazingaInc,yearendinfoWhendoingadjustingentries,youwillneedtodeterminewhatinformationisavailableattheendoftheaccountingperiodsothatyoucancalculatethecorrectbalancesforassetsandliabilityaccountsanddeterminetheamountstobeincludedasrevenueandexpenses.InACCY901,thistypeofinformationwillbegiventoyou.(a)Suppliesonhandattheendoftheperiodwere$8,000(b)Theusefullifeofshopfittingswas5yearsandtheresidualvalueis$5,000.(c)Athreeyearinsurancepolicywaspurchasedon1July2009.(d)Thebusinessemploysonesalesassistantwhoispaid$1,000forafivedayworkingweekandispaideveryFriday.BalancedayisaWednesday.(e)Comicbooksworth$3,500weresenttoacollectorwithaninvoiceon29June2010.(f)Thesubscriptionrevenuerecordedintheunearnedrevenueaccountwereforatwo-yearperiod,thereforehalfofthismoneywasearnedatyearend61Anexample:BazingaInc,year(a)Suppliesonhandattheend

oftheperiodwere$8,000Typeofadjustingentry~prepayment~costpaidforbeforeconsumedIntheunadjustedtrialbalance,suppliesatthebeginningoftheperiodwere$12,500Therefore,anadjustingentryisrequiredtoreducethebalanceto$8,000DateDescriptionDebitCredita30/6SuppliesexpenseSupplies(toreducesuppliesaccountto$8000)(a)Suppliesonhandattheen(b)Theusefullifeofshopfittingswas

5yearsandtheresidualvalueis$5,000.Typeofadjustingentry~prepayment~depreciationAdjustingentryfordepreciationexpense…Annualdepreciationexpense=(cost–residualvalue)/estimatedusefullifeAnnualdepreciationexpense=($15,000-$5,000)/5yearsDateDescriptionDebitCreditb30/06Depexp–fittingsAccumdep–fittings(torecorddepexpensefortheyear)(b)Theusefullifeofshopfi(c)Athreeyearinsurancepolicywaspurchasedon1July2009.Typeofadjustingentry~prepayment~prepaidexpenseInsurancepolicypurchasedatthebeginningofthecurrentyear.Validforthreeyears.Adjustingentryrecordsexpirationofpolicyoverthisperiod.DateDescriptionDebitCreditc30/06InsuranceexpensePrepaidinsurance(torecordinsuranceexpensefortheyear)(c)Athreeyearinsurancepol(d)Thebusinessemploysonesalesassistantwhoispaid

$1,000forafivedayworkingweekandispaideveryFriday.BalancedayisaWednesday.Typeofadjustingentry~accrual~unrecordedexpensesWorkout:howmuchispaidperdayANDhowmanydaysfallbetweendateoflastpayandbalancedate.DateDescriptionDebitCreditd30/06SalaryexpenseSalariespayable(torecordsalariesowedbutnotyetpaid)(d)Thebusinessemploysones(e)Comicbooksworth$3,500weresenttoa

collectorwithaninvoiceon29June2010.Typeofadjustingentry~accrual~unrecordedrevenueAdjustingentryforunrecordedrevenue…DateDescriptionDebitCredite30/06

(torecordrevenueearnedbutnotyetreceived)(e)Comicbooksworth$3,500w(f)Thesubscriptionrevenuerecordedinthe

unearnedrevenueaccountwereforatwo-yearperiod,

thereforehalfofthismoneywasearnedatyearendTypeofadjustingentry~deferral~unearnedrevenueAdjustingentryforunearnedrevenuenowearnedDateDescriptionDebitCreditf30/06

(torecordunearnedrevenueearnedduringtheyear)(f)ThesubscriptionrevenuerAnexample:BazingaInc68Onceadjustingentriesarepostedtoledgeraccounts,newtotalsarecalculatedandanadjustedtrialbalanceistakenAftertheadjustingprocessiscompleted,theadjustedtrialbalanceisusedtopreparethefinancialstatementsWewilluseworksheetstohelpuswiththisprocessAnexample:BazingaInc24OnceUsingaworksheet…69Whyuseaworksheet?IthelpstocompiletheinformationnecessaryforthepreparationofthefinancialstatementsThebalancesofledgeraccountsappearinonelocationTheaffectofadjustmentscanbeviewedeasilyandcorrectedifnecessaryBecausetheadjustedtrialbalanceiseasilyvisible,theworksheetcansimplifythepreparationoffinancialstatementsUsingaworksheet…25WhyuseaWhatdoesaworksheetlooklike?70WhatdoesaworksheetlooklikAnexample:BazingaInc71Oncetheadjustmentsareentered,theadjustedbalancesareextendedtotheappropriatecolumnsintheadjustedtrialbalance.ExpensesdebitcolumnRevenuecreditcolumnAssetsanddividends/drawingsdebitcolumnsLiabilities,equity,contraassetscreditcolumnsAnexample:BazingaInc27Once7228Anexample:BazingaInc73Finally,theamountsintheadjustedtrialbalanceareenteredintheincomestatementandbalancesheetcolumns.Expenses=debitcolumnofincomestatementRevenue=creditcolumnofincomestatementAssetsanddividends/drawings=debitcolumnofbalancesheetLiabilities,equity,contraassets=creditcolumnofbalancesheetThesecolumnsarethenusedtopreparethefinancialstatementsAnexample:BazingaInc29Final7430Incomestatementfromworksheet75IncomestatementfromworksheeStatementofchangesinequity76Retainedearnings,beginning21,500

Add:netprofit24,150

45,650

Less:dividends-

Retainedearnings,30June201045,650

BazingaIncStatementofChangesinEquityfortheyearended30June2010StatementofchangesinequityBalancesheetfromworksheet77Balancesheetfromworksheet33Chapter4:CompletionoftheaccountingcycleWeek378Chapter4:CompletionoftheaClosingentriesTomaketheaccountsreadyforthenextaccountingperiod,thebooksmustbeclosed.UnderstandthedifferencebetweenTemporary(ornominal)accountsPermanent(orreal)accountsTemporaryaccountsincludealltheincomestatementaccountsanddividend/drawingaccountsthatareusefulforoneperiodonly(todetermineprofitfortheyear).These