Podcast
Questions and Answers
What are accounted for in a worksheet?
What are accounted for in a worksheet?
- Account titles
- Trial balance
- Adjusted trial balance
- All of the above (correct)
What are the steps to do a worksheet?
What are the steps to do a worksheet?
- Trial balance
- Net income
- Owner's equity statement
- All of the above (correct)
Always balance at the end of each step.
Always balance at the end of each step.
True (A)
Where does net income go into?
Where does net income go into?
Is owner's equity statement included in the worksheet?
Is owner's equity statement included in the worksheet?
What happens after you're done with the worksheet?
What happens after you're done with the worksheet?
What is owner's capital?
What is owner's capital?
Can the worksheet be distributed to the company?
Can the worksheet be distributed to the company?
To adjust the accounts, the company must do what?
To adjust the accounts, the company must do what?
From where are the adjusting entries prepared?
From where are the adjusting entries prepared?
What is making the accounts ready for the next period called?
What is making the accounts ready for the next period called?
What distinguishes temporary accounts?
What distinguishes temporary accounts?
What do permanent accounts consist of?
What do permanent accounts consist of?
What do closing entries formally recognize?
What do closing entries formally recognize?
What do closing entries produce?
What do closing entries produce?
Instead of closing revenues and expenses to owner's capital, companies transfer them to?
Instead of closing revenues and expenses to owner's capital, companies transfer them to?
Where are closing entries recorded?
Where are closing entries recorded?
What does the first closing entry involve?
What does the first closing entry involve?
What does the second closing entry entail?
What does the second closing entry entail?
What does the third closing entry do?
What does the third closing entry do?
What does the fourth closing entry involve?
What does the fourth closing entry involve?
If there is a net loss, what should be done?
If there is a net loss, what should be done?
Post all the closing entries in the?
Post all the closing entries in the?
What is the post-closing trial balance composed of?
What is the post-closing trial balance composed of?
What is the summary of the accounting cycle?
What is the summary of the accounting cycle?
What are reversing entries?
What are reversing entries?
What are correcting entries?
What are correcting entries?
What consists of a classified balance sheet?
What consists of a classified balance sheet?
What constitutes current assets?
What constitutes current assets?
What are long-term investments?
What are long-term investments?
What does property, plant, and equipment consist of?
What does property, plant, and equipment consist of?
What are intangible assets?
What are intangible assets?
What are considered current liabilities?
What are considered current liabilities?
What constitutes long-term liabilities?
What constitutes long-term liabilities?
What does owner's equity represent?
What does owner's equity represent?
Study Notes
Worksheet Fundamentals
- A worksheet includes account titles, trial balance, adjusting entries, adjusted trial balance, net income, and balance sheet.
- Steps in creating a worksheet: account titles, trial balance, adjusting entries, adjusted trial balance, net income, and balance sheet.
- Each step must balance to ensure accuracy.
Financial Statement Preparation
- Net income is calculated by subtracting total expenses from total revenues, then recorded before new totals.
- Net income affects the balance sheet as it is included in owner's equity.
- After completing the worksheet, prepare the income statement, owner's equity statement, and balance sheet.
Owner's Capital and Worksheet Limitations
- Owner's capital is calculated as investments minus drawings minus net income.
- The worksheet is a working tool for accountants and is not distributed company-wide, nor is it a journal.
Adjusting Accounts and Entries
- Adjusting accounts require journalizing adjustments and posting them to the ledger; clarifications on adjusting entries are provided at the bottom of the worksheet.
- Adjusting entries are based on the adjustment columns within the worksheet.
Closing the Books
- "Closing the books" refers to preparing accounts for the next period by distinguishing between temporary and permanent accounts.
- Temporary accounts, including owner’s drawings, revenues, and expenses, are closed at period-end.
- Permanent accounts, such as assets, liabilities, and owner's capital, remain open across periods.
Closing Entries and Their Effects
- Closing entries officially transfer net income and dividends to owner's capital, as reflected in the owner's equity statement and are necessary at the end of the accounting period.
- Closing entries result in zero balances for each temporary account.
Income Summary and Closing Procedures
- Companies may choose to transfer revenues and expenses to an income summary instead of directly to owner's capital.
- Closing entries are recorded in the general journal and posted to the ledger, forming the post-closing trial balance consisting solely of permanent accounts.
Accounting Cycle Summary
- The accounting cycle includes analyzing transactions, journalizing, posting to the ledger, preparing trial balances, adjusting entries, preparing financial statements, and closing entries.
Optional and Necessary Entries
- Reversing entries are optional and undo specific adjusting entries made, while correcting entries—made whenever necessary—should precede closing entries.
Classified Balance Sheet
- A classified balance sheet organizes assets and liabilities into current and long-term categories.
- Current assets encompass cash, receivables, inventory, and supplies, expected to be utilized within one year.
- Long-term investments include stocks and real estate, while property, plant, and equipment represent long-lived assets subject to depreciation.
Liability and Equity Components
- Current liabilities consist of short-term obligations like accounts payable and interest payable.
- Long-term liabilities include mortgages and notes payable due beyond one year.
- Owner's equity reflects capital invested by the owner, adjusted for withdrawals and net income.
Studying That Suits You
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Description
Test your knowledge on accounting worksheets with these flashcards. Each card covers key terms such as account titles, trial balance, adjusting entries, and more. Perfect for students looking to master the essentials of worksheet preparation.
