Unit 5 Completion of theAccounting CycleI.AdjustingEntriesII.Closing EntriesII.Adjusted Trial Balance
Unit 5 Completion of the Accounting Cycle Ⅰ. Adjusting Entries Ⅱ. Closing Entries Ⅲ. Adjusted Trial Balance
Accounting Cycle1.Analyzingtransactions7.Financial2.MakingstatementjournalsAccountingCycle3.Preparing6.Adjustedledgerstrial balance4.Trial5.Adjusting&closingbalance2
2 1.Analyzing transactions Accounting Cycle 2.Making journals 3.Preparing ledgers 4.Trial balance 5.Adjusting &closing 6.Adjusted trial balance 7.Financial statement Accounting Cycle
I.AdjustingEntriesAdjusting entries arejournal entries whichareclassified as either prepayments or accrualsAdjusting entries are needed because they assignrevenues to the period when they are earned andexpenses to the period when they are incurred.With adjusting entries, related asset and liabilityaccounts balances are corrected under the conceptofaccrual-basis3
3 Ⅰ. Adjusting Entries ⚫ Adjusting entries are journal entries which are classified as either prepayments or accruals. ⚫ Adjusting entries are needed because they assign revenues to the period when they are earned and expenses to the period when they are incurred. ⚫ With adjusting entries, related asset and liability accounts balances are corrected under the concept of accrual-basis
Adjustment·PrepaymentsAccrualsPrepaid expensesAccruedrevenuesUnearned revenuesAccrued expenses
4 •Prepayments Prepaid expenses Unearned revenues Adjustment Accrued revenues Accrued expenses ⚫ Accruals
1.Prepayments:Prepaid expenses: expenses paidin cash and recorded inassets before they are used or consumed.Unearned revenues: cash received as liabilities beforerevenue is earned.2.Accruals:Accrued revenues: revenues earned but not yet received incash or recorded.Accrued expenses: expenses incurred but not yet paid incash or recorded.5
5 1.Prepayments: Prepaid expenses: expenses paid in cash and recorded in assets before they are used or consumed. Unearned revenues: cash received as liabilities before revenue is earned. 2.Accruals: Accrued revenues: revenues earned but not yet received in cash or recorded. Accrued expenses: expenses incurred but not yet paid in cash or recorded