Worksheet

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Worksheet

  1. 1. Week 5
  2. 2. <ul><li>Also known as an accounting period. </li></ul><ul><li>It’s the period of time that business reports financial information. </li></ul><ul><li>Business determines the length of fiscal period based on how often it needs information to make decisions. </li></ul><ul><li>Most fiscal periods begin at beginning of a month: Jan 1, Aug 1, etc. </li></ul><ul><li>Summarize detail from ledger onto the trial balance then prepare work sheet then prepare financial statements. </li></ul>
  3. 3. <ul><li>An accounting form used to summarize the general ledger information that’s needed to prepare the financial statements. </li></ul>
  4. 4. Total debits must equal total credits before proceeding to adjustments.
  5. 5. <ul><li>Record Supplies account adjustment </li></ul><ul><ul><li>Debit to Supplies Expense account in Adjustments debit column. </li></ul></ul><ul><ul><li>Credit to Supplies account in the Adjustments credit column. </li></ul></ul><ul><li>Record the Prepaid Insurance adjustment </li></ul><ul><ul><li>Debit to Insurance Expense account in Adjustments debit column. </li></ul></ul><ul><ul><li>Credit to Prepaid Insurance account in the Adjustments credit column. </li></ul></ul><ul><li>Prove the Adjustment columns to ensure debit total equals credit total. </li></ul>
  6. 6. Need to update ledger accounts at end of fiscal period. Adjustments are performed. Need to match expenses in same period they helped generate revenue.
  7. 7. <ul><li>Extend all Balance Sheet account balances </li></ul><ul><ul><li>Extend up-to-date asset account balances to Balance Sheet debit column </li></ul></ul><ul><ul><li>Extend up-to-date liability account balances to Balance Sheet credit column </li></ul></ul><ul><ul><li>Extend the owner’s capital and drawing account balances to the Balance Sheet columns </li></ul></ul><ul><li>Extend all Income Statement account balances </li></ul><ul><ul><li>Extend up-to-date revenue account balances to the Income Statement credit column </li></ul></ul><ul><ul><li>Extend up-to-date expense account balances to the Income Statement debit column </li></ul></ul>
  8. 9. <ul><li>Total Income Statement and Balance Sheet columns. </li></ul><ul><li>Calculate Net Income or Net Loss amount by taking difference between Income Statement credit column total and Income Statement debit column total. </li></ul><ul><li>Write amount of net income or net loss below smaller of two Income Statement column totals. </li></ul><ul><li>Extend the same amount to the smaller of two Balance Sheet column totals. </li></ul>
  9. 10. The total amount of revenue (credit column) is more than total amount of expenses (debit column) therefore the business had net income (made money).

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