Completing the Accounting Cycle
This chapter will explain the steps required to complete the accounting
cycle. This includes understanding the full accounting information
cycle, and what is used to create the financial statements that will be
provided to required and interested stakeholders. The accounting cycle
happens every month for most companies, and requires distinct steps and
cutoffs in order to create useful, consistent financial reports that
managers can use to make decisions that improve the performance of the
company. On a quartery and annual basis, financial statements are
created for outside stakeholders as well.
After studying this chapter, you should be able to:
- Summarize the steps in the accounting cycle.
- Prepare a work sheet for a service company.
- Prepare an income statement, statement of retained earnings, and balance sheet using information contained in the work sheet.
- Prepare adjusting and closing entries using information contained in the work sheet.
- Prepare a post-closing trial balance.
- Describe the evolution of accounting systems.
- Prepare a classified balance sheet.
- Analyze and use the financial results – the current ratio.
Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41317/mod_resource/content/11/AccountingPrinciples.pdf
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