Acc 201

Accounting Cycle Steps

1. analyze transactions and events 2. Journalize the transactions & events 3. Posting journal entries to ledger 4. Preparing the unadjusted trial balance 5. Journalize and posting closing entries 6. Preparing an adjusted trial balance 7. Prepare financial statements 8. Journalize and posting adjusting entries 9. Prepare a post-closing trial balance

Which of the following statements is correct regarding the difference between a temporary account and a permanent account?

A temporary account will not appear on a post-closing trial balance

A post-closing trial balance is a list of ______ accounts and their balances from the ______ _________ all ______ entries have been journalized and posted

Permanent ledger after closing

Summarize the closing process by listing the closing entries in the order in which they would occur at the end of the accounting period

Step 1: Close Income Statement credit balance accounts. Step 2: Close Income Statement debit balance accounts. Step 3: Close income summary Step 4: Close withdraws

Accounting Cycle

The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements

true statements regarding the Accounting Cycle

The cycle contains steps for adjusting and closing accounts The accounting cycle is a series of steps repeated each reporting period The accounting cycle refers to steps followed by a company to prepare its financial statements The accounting cycle contains 10 Steps

Describe Accrued Revenues

They refer to earnings which have been earned but not yet billed. Accounts receivable is usually increased when accruing revenues. They refer to revenues that are earned in a period but have not been received and are unrecorded. The adjustment causes an increase in an asset account and an increase in a revenue account.

Accrued __________ are earned in a period that are both unrecorded and not yet received in cash

revenues

Describe the closing process by identifying the correct steps

Close the Income Summary account Close all revenue accounts Close the Dividends account Close all expense accounts

a 12 month insurance policy was purchased on Dec. 1 for $4800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on Dec. 31 includes?

Credit to Prepaid insurance for $400 Debit to insurance expense for $400

The income summary account is _________ for the sum of all revenue accounts and is ________ for the sum of all expense accounts and its balance will be transferred to the _________ account

Credited Debited retained earnings

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 had been earned. Demonstrate what the correct adjusting entry should include by choosing the correct statement below.

Debit Unearned revenues for $400

Describe post-closing trial balance

It is a listing of all permanent accounts and their balances after closing

Define the Income Summary account.

It is a temporary account used during the closing process to summarize revenues and expenses. An account whose balance equals net income or net loss

Define the Salaries payable account

It reports amounts owed to employees is a liability It is reported on the balance sheet It is increased with a credit

Describe the purpose of a post-closing trial balance

One purpose is to verify that total debits equal total credit for permanent accounts One purpose is to verify that all temporary accounts have zero balances

TRUE STATEMENTS about permanent and temporary accounts

Temporary accounts have a balance for one period only. Retained earnings is a permanent account, but a Dividend is a temporary account. Permanent accounts are reported on the income statement AND balance Sheet Permanent accounts will appear on a post-closing trial balance

Closing means to transfer account balances from ______ (asset/liability/permanent/temporary) accounts so that they will start with a _______ (contra/larger/zero) balance at the beginning of the next period.

Temporary; Zero

Describe the general ledger after adjusting and closing entries have been posted

The income Summary account will show three closing entries All expense accounts will show a $0 balance after closing The Abbreviations "adj" and "clos" have been entered in the explanation columns of the ledger The dividends account will have a $0 balance after closing

$1000 of cash was received in advance for performing services. By the end of the period, $300 had not yet been earned. (Unearned Rev. was increased at the time of the initial cash receipt). What is the adjusting journal entry?

Unearned revenue would be debited for $700 Service revenue would be credited for $700

StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December:

debit accounts receivable credit services revenue

Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers have not yet been billed. Chimney's customers owe $2,000 to Chimney. How will Chimney Sweeps record this transaction?

debit accounts receivable and credit services revenue

Explain what unearned revenues are by choosing the correct statement below.

they are also called deferred revenues they are reported on a balance sheet they are a liability they refer to cash received in advance of preforming a service or product