Principles of Financial Accounting Chapter 4 Textbook PDF

WEYGANDT. KIESO. KIMMEL. TRENHOLM. KINNEAR. BARLOW. ATKINS PRINCIPLES OF FINANCIAL ACCOUNTING CANADIAN EDITION Chapter 4, p144 Completion of the Accounting Cycle Prepared by:...

WEYGANDT. KIESO. KIMMEL. TRENHOLM. KINNEAR. BARLOW. ATKINS PRINCIPLES OF FINANCIAL ACCOUNTING CANADIAN EDITION Chapter 4, p144 Completion of the Accounting Cycle Prepared by: Debbie Musil Kwantlen Polytechnic University 1 Copyright John Wiley & Sons Canada, Ltd. 2 OPEN “QUESTIONS – CHAPTER 4” ON GOOGLE CLASSROOM. ANSWER AS WE GO THROUGH THE PRESENTATION. Copyright John Wiley & Sons Canada, Ltd. 3  Chapter 4: Success Criteria I will be successful when I can……… 1. Prepare closing entries and a post-closing trial balance. 2. Prepare reversing entries Copyright John Wiley & Sons Canada, Ltd. 4  Closing the Books Done at the end of the accounting period – Accounts are made ready for the next period Temporary accounts: – Only collect data for a single period; closed at the end of the period – Revenue, expense and owner’s drawings accounts Permanent accounts: – Not closed – Balances are carried forward into next period – All balance sheet accounts Copyright John Wiley & Sons Canada, Ltd. 5  Textbook Questions As a class let’s work on BE4-1, p179 Copyright John Wiley & Sons Canada, Ltd. 6  Closing Entries Transfer temporary account balances to the owner’s capital account – Updates the owner’s capital account balance – Reduces balances in all temporary accounts to zero, so they are ready for the next period Journalizing and posting closing entries are a required step in the accounting cycle Revenue and expense accounts are closed to Income Summary (a temporary account) Copyright John Wiley & Sons Canada, Ltd. 7 The Closing Process Copyright John Wiley & Sons Canada, Ltd. 8  The Closing Process 1. Close revenue accounts – Debit each individual revenue account for the same amount as its balance to ‘zero’ it – Credit Income Summary for total revenues 2. Close expense accounts – Debit Income Summary for total expenses – Credit each individual expense account to ‘zero’ their balances 3. Close Income Summary – Debit Income Summary for balance (credit if loss) – Credit owner’s capital account (debit if loss) 4. Close drawings – Debit owner’s capital account – Credit owner’s drawings account for the balance – This will reduce the balance drawings to zero Copyright John Wiley & Sons Canada, Ltd. 9  Textbook Questions As a class let’s work on BE4-2, p179 Copyright John Wiley & Sons Canada, Ltd. 10  Group Work Questions In groups you will work on: Group 1: E4-1 Erica, Hyeonsu, Karan, Edward Group 2: E4-2 Pal, Ved, Hanson, Angus Group 3: E4-4 a), c), e) Rintaro, Swayam, Sparsh, Eric, Jeff Group 4: E4-5, Samuel, Bobby, Daniel, Ian The group who finishes first AND correctly gets a 20 second head start in Accounting Hunger Games next week! Copyright John Wiley & Sons Canada, Ltd. 11  Post-Closing Trial Balance Prepared after all closing entries have been journalized and posted Provides a list of all permanent accounts and their balances – These balances are carried forward into the next period – Since all temporary accounts have zero balances, only permanent accounts remain Copyright John Wiley & Sons Canada, Ltd. 12 Post-Closing Trial Balance Copyright John Wiley & Sons Canada, Ltd. 13  Textbook Questions As a class let’s work on E4-3 Copyright John Wiley & Sons Canada, Ltd. 14  Chapter 4: Success Criteria I will be successful when I can….. 1. Prepare closing entries and a post-closing trial balance. 2. Prepare reversing entries (Appendix 4B). Copyright John Wiley & Sons Canada, Ltd. 15 Kahoot – Chapter 1-3 Review Copyright John Wiley & Sons Canada, Ltd. 16  Copyright Copyright © 2014 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright John Wiley & Sons Canada, Ltd. 17  Appendix 4B: Reversing Entries Entries that reverse the adjusting entries at the beginning of the next period – Used to reverse accrued revenues and expenses Simplifies the recording of future transactions related to an adjusting entry – When transaction is recorded, no need to refer back to adjusting entries to determine how much relates to prior period Copyright John Wiley & Sons Canada, Ltd. 18  Textbook Questions As a class let’s work on BE4-15 On your own complete BE4-16 Copyright John Wiley & Sons Canada, Ltd. 19