Generally Accepted Accounting Principles and Trial Balance Essay

Submitted By mbrabh2

Words: 439

Pages: 2

Open Document

Chapter 3

The Accounting Cycle: 1. Journalize 2. Post to the ledger (T-accounts) 3. Prepare unadjusted trial balance 4. Adjusting entries 5. Prepare adjusted trial balance 6. Prepare financial statements 7. Closing entries 8. Prepare post-closing trial balance

Review of Financial Statements:

Review of Accounting Equation and Debits and Credits:

Review of Adjusting Entries:

1. Prepaid Expense – Cash paid now for a future expense. What type of account is this? ____________

2. Unearned Revenue – Cash received now for a future service that will be provided. What type of account is this? ___________

3. Accrued Revenue – Revenue earned but not yet received in cash. What type of account is this? ____________

4. Accrued Expense – Expense that has happened but has not yet been paid in cash. What type of account is this? __________

Additional adjusting entry practice:
Pioneer signed a 3-month, 12% note payable in the amount of $50,000 on October 1. Prepare the adjusting entry on October 31 to record the accrual of interest.

Review of Closing Entries:

Revenues, expenses, and dividends are “temporary accounts” because they are closed at the end of the year. All other accounts are permanent accounts.

Steps in preparing closing entries: 1. Close revenues to Income Summary. 2. Close expenses to Income Summary. 3. Close Income Summary to RE. 4. Close dividends to RE.

Income Summary – a temporary account only used during the closing process.

Post-closing trial balance – shows all permanent accounts.

Cash Basis Accounting versus Accrual Basis Accounting:

Most companies use accrual-basis accounting which means • recognize revenue when it is earned and • record expenses in the time period incurred, without regard to the time of receipt or payment of cash.

Under the strict cash basis, companies

Generally Accepted Accounting Principles and Trial Balance Essay

payment has been received. g. The school’s five employees are paid weekly. As of the end of the year, four days’ wages have accrued at the rate of $150 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. CHAMPLAIN CONFUSER SYSTEMS Unadjusted Trial Balance December 31, 2008 Cash $ 25,000 Accounts receivable -0- Teaching supplies 3,800 Prepaid insurance 9,800 Prepaid rent 500 Professional library 12,000 Accumulated…

Words 1527 - Pages 7

Acc 421 Accounting Cycle

Accounting Cycle Michelle Corniciuc ACC/421 11/24/2014 Art Trujillo Accounting Cycle A transaction is a type of external or internal event or exchange between two entities where each receives and sacrifices value. In every type of business there is some form of transactions occurring like sales, wages, and expenses, receivables, using buildings and machinery or consuming raw materials. A company will normally record these transactions and prepare financial statements using the steps…

Words 758 - Pages 4

aCC403 Ch 4 wk 2 Essay

That materiality question is a matter of auditor judgment. 3-31 Various types of “accounting changes” can affect the second reporting standard of the generally accepted auditing standards. This standard reads, “The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period.’’ Assume that the following list describes changes that…

Words 2587 - Pages 11

Essay on P1 the Purpose of Accounting

purpose of accounting for an organisation What is accounting Accounting is a recording, reporting, and analysis of financial transactions of the business. The person which is in charge or accounting is known as an accountant, this person is specifically in charge to follow rules and regulations, such as the generally accepted accounting principle. Accounting lets businesses to analyze the financial performance of the business, and look for statics such as net profit. The accounting process…

Words 2129 - Pages 9

Summary Of Accounting Terms Accountant

Summary of Accounting Terms Accountant – an individual who uses the data for interpretation of their effects to the business. Accounting – a systematic follow-through in documenting financial transactions of business properties and obligations. Accounting - the process of measuring and recording the financial information of assets and liabilities of a business. Accounting concepts – known as the building blocks of GAAP that are broken into assumptions, principles, and conventions. Accounting Cycle –…

Words 2927 - Pages 12

ACCT1002 Mid Semester Practice Essay example

basic purpose of Generally Accepted Accounting Principles (GAAPs) is to: a. Minimize the possibility of the business becoming insolvent b. Ensure the financial statements include the type of information that is best suited to every type of business decision c. Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements d. Eliminate the need for professional judgment in preparing financial statements 2. The accounting principle of matching…

Words 1280 - Pages 6

Accounting Research Paper

----------------------- Basic Concepts And Conventions Accounting principles are usually rules and conventions which have been adopted as a general guide to action by the accountancy profession. 1. The Business Entity Concept All accounts are kept in respect of business entities which are distinct from the persons who own or manage these entities. Sometimes the law makes the same distinction, as in the case of a limited company which is a separate legal entity from the shareholders…

Words 629 - Pages 3

Essay on Account Notes

and Credits Know the basic equation of accounting (Assets= Liabilities+Stockholders’ Equity) Know that Stockholders Equity is equal to common stock plus retained earnings Know that Retained Earnings = Expenses and Dividends subtracted from Revenues When you increase cash it is a debit and when you decrease cash it is a credit Increases in Liabilities are entered as credits and Decreases in Liabilities are entered as debits The normal balance is the side which is becoming increased…

Words 2582 - Pages 11

Chicken: Auditor ' s Report and Financial Statements Essay

assertion is more focused on expense and liability accounts. Relating to Account Balances Completeness addresses whether all assets, liabilities, and equity interests that should have been included as ending balances on the financial statements have been included. For example, management implicitly asserts that the ending balances shown for accounts payable on the balance sheet includes all such liabilities as of the balance sheet date. Relating to Presentation and Disclosure This assertion relates…

Words 2681 - Pages 11

Essay about Generally Accepted Accounting Principles and Cash

Provide financial information, statements, and reports to various users (Who are users?) Seasonality of Business Short distribution chain and time span Labor intensive Major investment in fixed assets What accounting does in our industry? Generally Accepted Accounting Principles (GAAP)------------------------------------------------------------ (1)Cost 말고 (2) Business entity - a restaurant owner, decided to take some sushi home for her dinner. He had to record the cost of the sushi as…

Words 1916 - Pages 8