Chapter 4
Completing the Accounting Cycle
Create
Identify
financial
transactions
statement
Make
Record
closing
transactions
entries
Make Post to the
adjusting general
entries ledger
Objectives
• Prepare a work sheet
• Prepare financial statements from a work sheet
Work sheets
Steps in completing a work
Contents sheet
Financial statements
Collecting and summarising data
(adjusting entries and account balances)
Not a formal accounting record
Work
sheets Prepared by using a spread-sheet
program on a computer
Helpful tool in preparing financial
statements
Work sheets
6 Columns
1st : Account title
2nd : Trial balance
Work sheets 3rd : Adjustments
4th : Adjusted Trial balance
5th :Profit and loss Statement
6th: Balance sheet
Step 1 Enter Trial Balance
Enter Adjustments (Accounts are added –
Step 2 as needed)
Steps in
completing a Step 3 Determine Adjusted Trial Balance
work sheet
Step 4 Place adjusted amount to PL or BS
Determine profit or loss (The difference
Step 5 between Dr and Cr of PL)
Exercise 1
- 1st March: Owner contributed 1 billion in cash as initial investment.
- 1st March: signed rental contract for 12 months, the rent is 20mil/month, paid in full advance by
cash.
- 3rd March: Company purchased a van on credit at price of 500 mil.
- 4th March: Purchased goods at 200 mil on credit.
- 5th March: Sold goods mentioned above at 300 mil and received cash.
- 7th March: Bought supplies with cost 10mil by cash.
- 14th March: Purchased goods at 400 mil by cash.
- 15th March: paid cash for insurance 24mil (2 years contract)
- 31st Salaries for sale assistant 10 mil, paid on 3rd April.
- 31st March: the remaining of supplies was 6 mil.
- 31st March: depreciation expense is 20 mil.
Accounts in PL should have no balances
no normal balances
khong có số dư
Closing these balances by transferring them to
Closing Profit and Loss Summary
account
Dr P&S summary $10100
Cr COGS $10100 (Dr (t-account) -> Cr (closing entries)
Chuyển về thì k có số dư nữa
Entries DR Revenue 13,500
Cr P&S summary 13,500
DR P&S summary $50
Cr Depreciation Ex $50
DR P&S summary $4,000
Cr rent Ex $4,000
Dr RE 650
Cr Cr P&S summary 650
This is called the Closing Process. Transferring
entries are called Closing Entries
• Dr PL summary
Cr Expenses
expense decrease để đưa vào
• Dr Sales credit
revenue increase để đưa vào bebit
closing entry
Cr PL summary revenue
expense
Closing Entries -> làm cho nó giảm để kết toán
• If sales > expenses:
Dr PL summary vẫn giữ nguyên, chuyển journal entries
sau adjusting entries
Cr Retained earnings expense
14150
revenue
13500
• If sales < expenses: 650 -> retained earning
Dr Retained earnings retained earning
Cr PL summary
decrease
decrease profit
loss
Profit and
loss
statement
Revenues Expenses
Revenue
COGS
Gross profit
Less
Supllies expense
Salaries expense
Net profit