REVIEW:

  1. Answer Self-Study Test Question #4 on page 200–Check your answer on page 214
  2. Do Checkpoint Exercise #3 on page 201–Check your answer on page 215

LO4–List and describe the steps in the accounting cycle.

  1. WATCH THIS VIDEO
  2. The Accounting Cycle–The steps involved in accounting for all of the business activities during an account period.
    1. Steps in the accounting cycle
      1. Analyze source documents.
      2. Journalize the transactions.
      3. Post to the general ledger accounts.
      4. Prepare a trial balance.
      5. Determine and prepare the needed adjustments on the work sheet.
      6. Complete an end-of-period work sheet.
      7. Journalize and post the adjusting entries.
      8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
      9. Journalize and post the closing entries.
      10. Prepare a post-closing trial balance.
      11. Steps 4 through 10 are performed “as of” the last day of the accounting period.
  3. In Class Exercise: Mastery Problem
    1. DOWNLOAD, ENABLE EDITING, & USE THIS SPREADSHEET
    2. You need to JOURNALIZE the ADJUSTING ENTRIES and the CLOSING ENTRIES
    3. SHOW ME WHEN YOU ARE DONE
  4. EXTRA CREDIT:
    1. Using the accounts from a business the students are familiar with, identify the current asset accounts; property, plant, and equipment accounts; and current liability accounts.
    2. Knowing how to classify accounts is a key piece of accounting knowledge. Reading a financial statement in today’s business world is not limited to accounting personnel. Anyone involved with making business decisions must have a firm grasp of the parts of financial statements. By reviewing published financial statements, students can practice identifying the various classifications, such as current assets; current liabilities; and property, plant, and equipment.
    3. LO1    Study Guide Review Questions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13; Study Guide Exercises 1, 2; Study Guide Problems 4, 5, 6, 7; End of Chapter Review Questions 1, 2, 3, 4, 5; Exercises E6-1A, E6-1B
    4. LO2    Study Guide Review Questions 14, 15, 16, 17, 18; Study Guide Exercise 3; Study Guide Problem 8; End of Chapter Review Questions 6, 7, 8, 9; Exercises E6-4A, E6-4B, E6-5A, E6-5B
    5. LO3    Study Guide Review Question 19; Study Guide Problem 9; End of Chapter Review Question 10
    6. LO4    Study Guide Review Question 20; End of Chapter Review Question 11
    7. Managing Your Writing, Mastery Problem, and Challenge Problem

Ten Things You Might Ask

  1. How important is the placement of dollar signs and single and double lines?
  2.  Do you mean “the bottom line” is really two lines?
  3. Should you always use “less” or “add” on financial statements (i.e., “Add additional investments”)?
  4. Are accounts receivable always current assets?
  5. Are computers, in today’s world, current or long-term assets?
  6. Would we treat a software license as a short-term or long-term asset?
  7. To close, do you do the opposite of the balance (i.e., if there is a debit balance, close with a credit)?
  8. When you close an account, does that amount go into Income Summary?
  9. If you close an account with a credit, then do you debit Income Summary?
  10. Should the balance sheet and the post-closing trial balance have the same numbers?