Essay About Trial Balance Of The Accounts And Income Statement

Understanding the Learning Objectives
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Chapter 4
Understanding The Learning Objectives
Objective 1
Summarize the steps in
* Analyze transactions by examining source documents.
the accounting cycle.
* Journalize transactions in the journal.
Post journal entries to the accounts in the ledger.
Prepare a trial balance of the accounts and complete the
work sheet.
Prepare financial statements.
Journalize and post adjusting entries.
Journalize and post closing entries.
Prepare a post-closing trial balance.
Objective 2
Prepare a work sheet for
* The work sheet is a columnar sheet of paper on which
a service company.
* Accountants summarize information needed to make
the adjusting and closing entries and to prepare the
financial statements.
Worksheets may vary in format. The work sheet
illustrated in the chapter has 12 columns-two each for
trial balance, adjustments, adjusted trial balance,
income statement, statement of retained earnings, and
balance sheet.
Objective 3
Prepare and income state-
* The information needed to prepare the income state-
ment, statement of retained
* ment is in the Income Statement columns of the work
earnings, and balance
sheet. Net income for the period is the amount needed
sheet using information
to balance the two Income Statement columns in the
contained in the work
work sheet.
sheet.
* The information needed to prepare the statement of
retained earnings is in the Statement of Retained Earn-
ings columns of the work sheet. The ending Retained
Earnings balance is carried forward to the balance
sheet.
The information needed to prepare the balance sheet
is in the Balance Sheet columns of the work sheet.
Objective 4
Paul Hindelang
Section #0180
Acct 230 9/13/00
Prepare adjusting and
* As explained in Chapter 3, adjusting entries are
closing entries using
necessary to bring the accounts to their proper
information contained in
balances before preparing the financial statements.
the work sheet.
* Closing entries are necessary to reduce the balances
of revenue, expense, and Dividends accounts to
Page 2 Chapter 4
zero so they are ready to receive data for the next
accounting period.
Revenue accounts are closed by debiting them and
crediting the Income Summary account.
Expense accounts are closed by debiting them and
crediting the Income Summary account.
The balance in the Income Summary account re-
presents the net income or net loss for the period.
To close the Income Summary account, the balance
is transferred to the Retained Earnings account.
To close the Dividends account, the balance is transferred to the Retained Earnings account.
Objective 5
Prepare a post-closing
* Only the balance sheet accounts have balances and
trial balance.
Appear on the post-closing trial balance.
All revenue, expense, and Dividends accounts have
zero balances and are not included in the post-closing
trial balance.
Objective 6
Describe the evolution of
* Manual systems and computerized systems perform
accounting systems.
the same accounting functions.
The ease of accounting with a microcomputer has
encouraged even small companies to convert to
computerized systems.
Objective 7
Prepare a classified
* A classified balance sheet subdivides the major
balance sheet.
Categories on the balance sheet. For instance,
a classified balance sheet subdivides assets
into current assets; long term investments;
property, plant, and equipment; and intangible assets.
It subdivides liabilities into current l
iabilities and long-
term liabilities. Later chapters