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Steps in Foundation Studies 2 Prac
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Steps in Foundation Studies 2 Prac

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  • 1. Foundation Studies 2
    Practical Questions
  • 2. 1 Process Balance Day Adjustments
    Process the adjustment
    Increase or decrease expense or revenue (display the adjusted amount in the list of accounts)
    Raise the adjustment account (add to the bottom of the list of accounts)
    Unearned revenue
    Accrued revenue
    Prepaid expense or
    Accrued expenses
    Complete the General Journal entry
  • 3. 2 Closing Entries
    Complete the closing entries in the General Journal
    Debit Revenue/Credit P&L Summary a/c
    Credit Expense/Debit P&L Summary a/c
  • 4. 3 Calculate Profit/Loss
    Deduct total expenses from total revenues to determine profit or in some instances loss
    Complete the double entry in the General Journal
    If a profit
    Debit the P&L Summary/Credit Capital
    If a loss
    Debit Capital/Credit the P&L Summary
  • 5. 4 Transfer Drawings to Capital
    Complete a General Journal entry to perform the transfer
    Debit Capital/Credit Drawings
  • 6. 5 Ledger
    Complete the following accounts:
    Profit & Loss Summary
    Capital and
    Drawings accounts
  • 7. Income Statement
    Complete the statement using the expenses and revenues
    Make sure you use the ‘adjusted amounts’ for expenses and revenues
  • 8. Balance Sheet
    Complete the balance sheet using the assets, liabilities and owner’s equity for the question
    Make sure you add the following accounts to the Asset section
    Prepaid Expenses
    Accrued Revenues
    Make sure you add the following accounts to the Liabilities section
    Accrued Expenses
    Unearned Revenues