@ 2012, cengage learning completing the accounting cycle lo 1 – understanding the accounting cycle

@ 2012, Cengage Learning

Completing the Accounting Cycle

LO 1 – Understanding the Accounting Cycle

Flow of Accounting Information

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(continued)

Flow of Accounting Information

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(continued)

Flow of Accounting Information

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(concluded)

End-of-Period Spreadsheet (Work Sheet)End-of-Period Spreadsheet (Work Sheet)

Unadjusted TB

Accounts Dr Cr Dr Cr Dr Cr

Adjustments Adjusted TB

Flow of Accounting Information

Account balances are listed in the Unadjusted Trial Balance columns using the ending balances found in the general ledger.

LO 1LO 1

(continued)

End-of-Period Spreadsheet (Work Sheet)End-of-Period Spreadsheet (Work Sheet)

Accounts Dr Cr Dr Cr Dr Cr

Adjustments Adjusted TB

Flow of Accounting Information

Adjustments are entered here. Two possibilities: Deferrals – Existing balances are changed Accruals – New information is entered

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(continued)

Unadjusted TB

Accounts Dr Cr Dr Cr Dr Cr

Adjustments Adjusted TB

End-of-Period Spreadsheet (Work Sheet)End-of-Period Spreadsheet (Work Sheet)

Flow of Accounting Information

Adjustments are combined with the unadjusted trial balance amounts to provide balances for the Adjusted Trial Balance columns.

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(continued)

Unadjusted TB

Adjusted TB

Accounts Dr Cr Dr Cr Dr Cr

Income State. Balance Sheet

End-of-Period Spreadsheet (Work Sheet)End-of-Period Spreadsheet (Work Sheet)

LO 1LO 1Flow of Accounting Information

Revenue and expense balances in the Adjusted Trial Balance columns are extended to the Income Statement columns.

(continued)

Adjusted TB

Accounts Dr Cr Dr Cr Dr Cr

Income State. Balance Sheet

End-of-Period Spreadsheet (Work Sheet)End-of-Period Spreadsheet (Work Sheet)

Flow of Accounting Information

Asset, liability, and stockholders’ equity, balances in the Adjusted Trial Balance columns are extended to the Balance Sheet columns.

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(concluded)