1、4 - 1会计学1Fundamental Financial Accounting 1Instructor: Dr. Xiaoyan LuEmail: Tel: 841142724 - 2STUDY OBJECTIVESAfter studying this chapter, you should understand: CHAPTER 4COMPLETE THE ACCOUNTING CYCLEHow to prepare a worksheetSteps in the accounting cycleThe closing processCorrecting entriesThe post
2、-closing trial balanceThe classified balance sheet4 - 3 A work sheet is a multiple-column form that may be used in the adjustment process and in preparing financial statements. It is an optional tool -not a permanent record. Adjustments are journalized and posted from the work sheet after financial
3、statements are prepared.STUDY OBJECTIVE 1PREPARING A WORKSHEET4 - 4Benefits of a Work SheetAids the preparation of financial statements.Reduces possibility of errors.Links accounts and their adjustments.Assists in planning and organizing an audit.Helps in preparing interim financial statements.Shows
4、 the effects of proposed transactions.Not a required report.P 14 - 51.2.3.4.Prepare aEnterEnterExtend adjusted balances totrial balanceadjustmentadjustedappropriate statement columnson thedatesbalances5.work sheetTotal the statement columns,compute net income (or netloss), and complete work sheetWor
5、k SheetAdjustedIncomeBalanceAccountTrial BalanceAdjustmentsTrial BalanceStatementSheetTitlesDr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.(Ledgeraccounttitles)(Additionalaccount titlesforadjustments)FORM AND PROCEDURE FOR A WORK SHEET4 - 61 Prepare a trial balance on the worksheet2 Enter the adjustments in the adju
6、stments columns3 Enter adjusted balances in the adjusted trial balance columns4 Extend adjusted trial balance amounts to the F/S columns 5 Total F/S columns, compute net income or loss, and complete the worksheetSTEPS IN PREPARING A WORKSHEET4 - 7FastForwardWorksheetFor the Month Ended December 31,
7、2013P 14 - 8STUDY OBJECTIVE 2 The Closing Process1. Resets revenue, expense, and withdrawal account balances to zero at the end of the period.2. Helps summarize a periods revenues and expenses in the Income Summary account.Identify accountsfor closing.Record and postclosing entries. Prepare post-clo
8、singtrial balance.C 14 - 9Temporary AccountsRevenuesIncome SummaryExpensesWithdrawalsPermanent AccountsAssetsLiabilitiesOwners CapitalTemporary andPermanent AccountsC 14 - 10Lets see how the closing process works!Recording Closing EntriesClose Credit Balances in Revenue Accounts to Income Summary.Cl
9、ose Debit Balances in Expense accounts to Income Summary.Close Income Summary account to Owners Capital.Close Withdrawals to Owners Capital.P 24 - 11Using the adjusted trial balance, lets prepare the closing entries for FastForward.P 24 - 121. Close Credit Balances in Revenue Accounts to Income Summ
10、ary.P 24 - 13 Close Credit Balances inRevenue Accounts to Income SummaryNow, lets look at the ledger accounts after posting this closing entry.P 24 - 14Consulting Revenue7,850 7,850 - Rental Revenue300 300 - P 2 Close Credit Balances inRevenue Accounts to Income Summary4 - 152. Close Debit Balances
11、in Expense Accounts to Income Summary.P 24 - 16Now, lets look at the ledger accountsafter posting this closing entry. Close Debit Balances in Expense Accounts to Income SummaryP 24 - 17Utilities Expense230 230 - Rent Expense1,000 1,000 - Net Income Close Debit Balances in Expense Accounts to Income
12、Summary Supplies Expense1,050 1,050 - Depreciation Expense- Eq.375 375 - Salaries Expense1,610 1,610 - Insurance Expense100 100 - P 24 - 183. Close Income Summary to Owners Capital.P 24 - 19Now, lets look at the ledger accountsafter posting this closing entry. Close Income Summaryto Owners CapitalP
13、24 - 20P 2 Close Income Summaryto Owners Capital4 - 214. Close Withdrawals Account to Owners Capital.P 24 - 22Now, lets look at the ledger accountsafter posting this closing entry. Close Withdrawals Accountto Owners CapitalP 24 - 23P 2 Close Withdrawals Accountto Owners Capital4 - 24Summary of the C
14、losing Process1. Close Credit Balances in Revenue Accounts to Income Summary.2. Close Debit Balances in Expense Accounts to Income Summary.3. Close Income Summary to Owners Capital.4. Close Withdrawals Account to Owners Capital.4 - 25Lets look at FastForwardspost-closing trial balance.Post-Closing T
15、rial Balance List of permanent accounts and their balances after posting closing entries. Total debits and credits must be equal.P 34 - 26Post-Closing Trial BalanceP 34 - 27Accounting CycleC 24 - 28Current items are those expected to come due (both collected and owed) within the longer of one year o
16、r the companys normal operating cycle.Classified Balance SheetC 34 - 29Current assets are expected to be sold, collected, or used within one year or the companys operating cycle. C 34 - 30Long-term investments are expected to be held for more than one year or the operating cycle.C 34 - 31Plant asset
17、s are tangible long-lived assets used to produce or sell products and services.C 34 - 32Intangible assets are long-term resources used to produce or sell products and services and that lack physical form.C 34 - 33Current liabilities are obligations due within the longer of one year or the companys o
18、perating cycle.C 34 - 34Long-term liabilities are obligations not due within the longer of one year or the companys operating cycle.C 34 - 35Equity is the owners claim on the assets. C 34 - 36Global ViewThe definition of an asset is similar under U.S. GAAP and IFRS and involves three basic criteria:
19、 (1) the company owns or controls the right to use the item, (2) the right arises from a past transaction or event, and (3) the item can be reliably measured. Both systems define the initial asset value as historical cost for nearly all assets.The definition of a liability is similar under U.S. GAAP
20、 and IFRS and involves three basic criteria: (1) the item is a present obligation requiring a probable future resource outlay, (2) the obligation arises from a past transaction or event, and (3) the obligation can be reliably measured.4 - 37Current RatioHelps assess the companys ability to pay its d
21、ebts in the near future Current Ratio =Current Assets Current Liabilities Limited Brands, Inc.A 14 - 38P 4Appendix 4A Reversing EntriesReversing entries are optional. They are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of a report
22、ing period. The purpose of reversing entries is to simplify a companys recordkeeping.Lets see how the accounting for our payroll accrual will be handled with and without reversing entries.4 - 39P 44 - 40P 4Without Reversing EntriesWith Reversing Entries4 - 41Assignments Individual: E4-1, E4-2, E4-3, E4-4, E4-5, E4-6, E4-7 Group Assignment: P4-2A, P4-3A Class Discussion: What two purposes are accomplished by recording closing entries?4 - 42End of Chapter 4
