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1、STUDY OBJECTIVESAfter studying this chapter,you should understand:CHAPTER 4COMPLETE THE ACCOUNTING CYCLEHow to prepare a worksheetSteps in the accounting cycleThe closing processCorrecting entriesThe post-closing trial balanceThe classified balance sheet第1页/共42页A work sheet is a multiple-column form
2、 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 statements are prepared.STUDY OBJECTIVE 1PREPARING A WORKSHEET第2页/共42页Benefits of a Work SheetAid
3、sthepreparationoffinancialstatements.Reducespossibilityoferrors.Linksaccountsandtheiradjustments.Assistsinplanningandorganizinganaudit.Helpsinpreparinginterimfinancialstatements.Showstheeffectsofproposedtransactions.Notarequiredreport.P 1第3页/共42页1.2.3.4.Prepare aEnterEnterExtend adjusted balances to
4、trial balanceadjustmentadjustedappropriate statement columnson thedatesbalances5.work sheetTotal the statement columns,compute net income(or netloss),and complete work sheetWork SheetAdjustedIncomeBalanceAccountTrial BalanceAdjustmentsTrial BalanceStatementSheetTitlesDr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.(L
5、edgeraccounttitles)(Additionalaccount titlesforadjustments)FORM AND PROCEDURE FOR A WORK SHEET第4页/共42页1 Prepare a trial balance on the worksheet2 Enter the adjustments in the adjustments columns3 Enter adjusted balances in the adjusted trial balance columns4 Extend adjusted trial balance amounts to
6、the F/S columns 5 Total F/S columns,compute net income or loss,and complete the worksheetSTEPS IN PREPARING A WORKSHEET第5页/共42页FastForwardWorksheetFortheMonthEndedDecember31,2013P 1第6页/共42页STUDY OBJECTIVE 2 The Closing Process1.Resets revenue,expense,and withdrawal account balances to zero at the en
7、d 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-closingtrial balance.C 1第7页/共42页Temporary AccountsRevenuesIncome SummaryExpensesWithdrawalsPermanent AccountsAssetsLiabilitiesOwner
8、s CapitalTemporary andPermanent AccountsThe closing process The closing process applies only to applies only to temporary accounts.temporary accounts.C 1第8页/共42页Lets see how the closing process works!Recording Closing EntriesClose Credit Balances in Revenue Accounts to Income Summary.Close Debit Bal
9、ances in Expense accounts to Income Summary.Close Income Summary account to Owners Capital.Close Withdrawals to Owners Capital.P 2第9页/共42页Usingtheadjustedtrialbalance,letspreparetheclosingentriesforFastForward.P 2第10页/共42页1.CloseCreditBalancesinRevenueAccountstoIncomeSummary.P 2第11页/共42页 Close Credi
10、t Balances inRevenue Accounts to Income SummaryNow,lets look at the ledger accounts after posting this closing entry.P 2第12页/共42页P 2 Close Credit Balances inRevenue Accounts to Income Summary第13页/共42页2.CloseDebitBalancesinExpenseAccountstoIncomeSummary.P 2第14页/共42页Now,lets look at the ledger account
11、safter posting this closing entry.Close Debit Balances in Expense Accounts to Income SummaryP 2第15页/共42页NetIncome Close Debit Balances in Expense Accounts to Income Summary P 2第16页/共42页3.CloseIncomeSummarytoOwnersCapital.P 2第17页/共42页Now,lets look at the ledger accountsafter posting this closing entr
12、y.Close Income Summaryto Owners CapitalP 2第18页/共42页P 2 Close Income Summaryto Owners Capital第19页/共42页4.CloseWithdrawalsAccounttoOwnersCapital.P 2第20页/共42页Now,lets look at the ledger accountsafter posting this closing entry.Close Withdrawals Accountto Owners CapitalP 2第21页/共42页P 2 Close Withdrawals A
13、ccountto Owners Capital第22页/共42页Summary of the Closing 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.第23页/共42页Lets look at FastFo
14、rwardspost-closing trial balance.Post-Closing Trial BalanceList of permanent accounts and their balances after posting closing entries.Total debits and credits must be equal.P 3第24页/共42页Post-Closing Trial BalanceP 3第25页/共42页Accounting CycleC 2第26页/共42页Currentitemsarethoseexpectedtocomedue(bothcollec
15、tedandowed)withinthelongerofoneyearorthecompanysnormaloperatingcycle.Classified Balance SheetC 3第27页/共42页Currentassetsareexpectedtobesold,collected,orusedwithinoneyearorthecompanysoperatingcycle.C 3第28页/共42页Long-terminvestmentsareexpectedtobeheldformorethanoneyearortheoperatingcycle.C 3第29页/共42页Plan
16、tassetsaretangiblelong-livedassetsusedtoproduceorsellproductsandservices.C 3第30页/共42页Intangibleassetsarelong-termresourcesusedtoproduceorsellproductsandservicesandthatlackphysicalform.C 3第31页/共42页Currentliabilitiesareobligationsduewithinthelongerofoneyearorthecompanysoperatingcycle.C 3第32页/共42页Long-
17、termliabilitiesareobligationsnotduewithinthelongerofoneyearorthecompanysoperatingcycle.C 3第33页/共42页Equityistheownersclaimontheassets.C 3第34页/共42页Global ViewThedefinitionofanassetissimilarunderU.S.GAAPandIFRSandinvolvesthreebasiccriteria:(1)thecompanyownsorcontrolstherighttousetheitem,(2)therightaris
18、esfromapasttransactionorevent,and(3)theitemcanbereliablymeasured.Bothsystemsdefinetheinitialassetvalueashistoricalcostfornearlyallassets.The definition of a liability is similar under U.S.GAAP and IFRS and involves three basic criteria:(1)the item is a present obligation requiring a probable future
19、resource outlay,(2)the obligation arises from a past transaction or event,and(3)the obligation can be reliably measured.第35页/共42页Current RatioHelpsassessthecompanysabilitytopayitsdebtsinthenearfutureCurrentRatio=CurrentAssetsCurrentLiabilities LimitedBrands,Inc.A 1第36页/共42页P 4Appendix 4A Reversing E
20、ntriesReversingentriesareoptional.Theyarerecordedinresponsetoaccruedassetsandaccruedliabilitiesthatwerecreatedbyadjustingentriesattheendofareportingperiod.Thepurposeofreversingentriesistosimplifyacompanysrecordkeeping.Lets see how the accounting for our payroll accrual will be handled with and witho
21、ut reversing entries.第37页/共42页P 4第38页/共42页P 4Without Reversing EntriesWith Reversing Entries第39页/共42页Assignments Individual:E4-1,E4-2,E4-3,E4-4,E4-5,E4-6,E4-7Group Assignment:P4-2A,P4-3AClass Discussion:What two purposes are accomplished by recording closing entries?第40页/共42页End of Chapter 4第41页/共42页感谢您的观看。第42页/共42页