Ch 3 Review

Adjusting entries are journal entries that adjust accounts to the correct balances. Accrual accounting records revenues and expenses when they are earned or incurred. Sometimes adjusting entries need to be made to adjust for unearned service revenue or depreciation expenses. The adjusting entries will correctly balance accounts and correct any understatement or overstatement in the revenue or expense accounts. If the adjusting entries are not made it can overstate or understate net income and completely misrepresent the financial statements. The fifth step in the accounting cycle is preparing an adjusted trial balance. Once all of the accounts have been adjusted, the balanced totals can be transferred over to the adjusted trial balance. The adjusted trial balance should give an accurate balance on all accounts. After completing the adjusted trial balance, the next step in the accounting cycle is preparing the financial statements. The totals from the adjusted trial balance will be used to prepare each financial statement. The seventh step is posting closing entries. Closing entries are journal entries that close revenues, expenses, and dividends. In order to close these accounts, the total balance needs to be entered into the opposite column of the accounts to zero them out. For instance, service revenue would be debited and retained earnings would be credited. All expense accounts and dividends would

Course Overview: A manager needs a general understanding of accounting which is the process of recording, classifying, reporting and interpreting the financial data of an organization. Discussion, case examples and analysis of double-entry bookkeeping techniques lead to a foundation for analysis of basic financial statements. Managerial accounting concepts then provide the analytical tools necessary for day-to-day management of the business enterprise. Ideally, the student will learn how to evaluate current accounting information and how to make the accounting system a better contributor to the management process.

2.     (TCO 2) As required to complete Course Project 1, one must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how information from the journal entries get into the ledger accounts (15 points) and (2) provide an example of information that would be transferred. (10 points)(Points : 25)

In this paper I have defined accrual and cash basis accounting. Also, I have answered the following questions: Explain the difference between the accrual basis of accounting and the cash basis of accounting. What are the major reasons for using accrual accounting? What are the purpose of a journal and a ledger? Give an example of a contra-asset, and explain how it is recorded on the ledger as a transaction. Explain what a “prepaid expense” is and how it is recorded on the ledger as a transaction. What are the major differences in recording transactions for a for-profit organization versus a not-for-profit, or are there any? List and record each transaction

Let’s start with a review of the three requirements of Part A of the Course Project. Explain why it is important to analyze each financial transaction of a business and to report it in the Accounting Information

The overall process of recording and processing financial events in a business is known as the accounting cycle. The collective process includes ten different steps that begin with analyzing and recording transactions and ending with post-closing and trial balance is prepared. Through this paper it will be explained all the steps with examples of how the steps are implemented in real life business situations.

3. Prepare a pro forma balance sheet and income statement providing the assumptions made and support the valuations assigned.

11) Which of the following items on a bank reconciliation would require an adjusting entry on the company’s books?

 you start with the trial balance and work your way back through the ledger and the journal to the transaction

b. Prepare the statement of cost of goods manufactured, income statement, and balance sheet for October 31.

This cycle, cycle 2, we discussed, chapter 5, chapter 6. In chapter 5 I learned how to define accounting terms related to using a checking account and a petty cash fund, identify accounting concepts and practices related to using a checking account, prepare business papers related to using a checking account, reconcile a bank statement, journalize dishonored checks and electronic banking transactions, and establish and replenish a petty cash fund. In chapter 6 I learned how to define accounting terms related to a work sheet for a service business organized as a proprietorship, identify accounting concepts and practices related to a work sheet for a service business organized as a proprietorship, prepare a heading and a trial balance on a work sheet, plan adjustments for supplies and prepaid insurance, complete a work sheet for a service business organized as a proprietorship, and identify selected procedures for finding and correcting errors in accounting records. I also learned about FICO, which is an algorithm of how creditworthy you are founded by Bill Fair and Earl Isaac in 1956.

Complete the following exercises in Understanding Financial Statements: Case 1.1, Problem 2.19, and Case 2.1.

34. Which of the following presents a summary of changes in a firm’s balance sheet from the beginning of an accounting period to the end of that accounting period?

During the last term, i have had learned some knowledge from the subject called introduction to finical accounting. For me, this is the first time I had chance to learn this subject, before that I just heard some information about IFA by reading the FT newspaper and watching the news. When I start learning that, this subject gives me the impression that it is difficult to understand. During the past few months, I can say I already mastered some of the skills in IFA. I can still remember the first lecture I had learned was the definition of the “Accounting Equation”, I can conclude that the most important thing you must master is you should try to distinguish the meaning of the capital, assets and liability. Assets are

Employees are interested in better emoluments, bonus and continuance of business and whether the dues like provident fund, ESI et., have been deposited with the authorities.