Accounting- worksheets
is owner's equity statement in the worksheet?
No.
What's in a worksheet
Account titles, trial balance, adjusting entries, adjusted trial balance, net income and balance sheet
3 closing entry
Dr inc sum and Cr O.C with the net income
Long-term liabilities
Mortgage payable ; Notes payable (won't pay after a year)
closing entries also produce
a zero balance in each temporary act
temporary accounts
all are closed at the end of the period: Owner's drawings, revenues and expenses
LT investments
Stock investments/investments in real estate
summary of the acct cycle
analyze -> journalize ->post to the ledger ->prepare trial balance -> adjust entries -> adjusted trial balance, ->income statement -> balance sheet -> owner's equity statement ->journalize and post closing entries -> post-closing trial balance
correcting entries-avoidable step
are unnecessary unlike adjusting entries, and they can be made at any time *THEY MUST BE POSTED BEFORE CLOSING ENTRIES *Compare the wrong entry with the correct entry and you'll come up with the adjusting one
always
balance in the end of each step
Reversing entries - optional step
reverses the exact adjusting entry made -> totally optional bookkeeping procedure
closing the books distinguishes between:
temporary and permanent accounts
net income goes into
the balance sheet as owner's equity
to adjust the accounts
the company must journalize the adjustments and post them to the ledger *explanations on the bottom of the worksheet help identify the adjusting entries
net income totals, net income and new totals
total revenues and total expenses, then total net income (jumps a line) then new totals (expenses the same, net income added to revenue)
what happens after you're done with the worksheet?
you prepare the income statement, owner's equity statement, and the balance sheet
if there is a net loss
credit inc summary and debit O.C
4.
debit O.C for the balance in O.D and credit O.D for same amount
1 closing entry
debit each revenue account for its balance, credit income sum for total rev
2 closing entry
debit inc sum for total expenses, credit each expense acct
closing entries
formally recognize in the ledger the transfer of net income and dividends to owner's capital -> shown by the O.E statement *REQUIRED STEP IN THE ACCT CYCLE *GENERALLY DONE AT THE END OF THE ANNUAL ACCT PERIOD
The adjusting entries are prepared from
from the adjustment columns of the worksheet
closing entries are recorded in the
general journal
insteadd of closing R and E to O.C, companies transfer them to
income summary
owner's capital
investments minus drawings minus net income
Property plant and equipment
land, equipment less acc dep equip -Long lives, suffer depreciation
Post all the closing entries in the
ledger
current liabilities
n/p, a/p, U/S/R, S/W Payable, Interest payable *obligations the company is going to pay within one year
can the worksheet be distributed to the company?
no, it is a working tool of the accountant -> it is not a journal
Permanent accounts:
not closed from period to period: assets, liabilities and owner's capital
post-closing trial balance
only permanent accounts
journalizing and posting of adjusting entries follows the p
preparation of financial statements when a work-sheet is used
intangible assets
patents, goodwill
what are the steps to do a worksheet?
1-Acct titles 2-trial balance 3-Adjusting entries 4-Adjusted trial balance 5-Net income 6-Balance sheet
classified balance sheet:
Assets and liabilities
Current assets:
Cash, debt investments, a/r, n/r, inventory, supplies, prep ins *company expects to use it within one year or its operating cycle (time to purchase inventory, sell it, collect cash)
making the accounts ready for the next period is called
closing the books
Owner's equity
owner's capital
