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Adjusting Accounts for Financial Statements

The document outlines learning objectives related to adjusting accounts for financial statements, including the purpose of adjustments, principles affecting the process, and preparation of adjusting entries. It also discusses the relationship between accounting adjustments and financial statements, as well as the preparation of an adjusted trial balance and financial statements. Additionally, it provides a case study on asset, equity, and liability calculations for a specific date, highlighting the impact of losses on equity.

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Matheo Andrade rubio
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9 views114 pages

Adjusting Accounts for Financial Statements

The document outlines learning objectives related to adjusting accounts for financial statements, including the purpose of adjustments, principles affecting the process, and preparation of adjusting entries. It also discusses the relationship between accounting adjustments and financial statements, as well as the preparation of an adjusted trial balance and financial statements. Additionally, it provides a case study on asset, equity, and liability calculations for a specific date, highlighting the impact of losses on equity.

Uploaded by

Matheo Andrade rubio
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Learning objectives :

1. excelling at Adjusting accounts for Financial statements


2. LO1: Describe the purpose of adjusting accounts at the end of the
period.
3. LO2: Explain how the timeliness, matching, and revenue recognition
principles affect the adjusting process.
4. LO3: Explain accrual accounting and cash basis accounting and how
accrual accounting adds to the usefulness of financial statements.
5. LO4: Prepare and explain adjusting entries for prepaid expenses,
depreciation, unearned revenues, accrued expenses, and accrued
revenues.
6. LO5: Explain how accounting adjustments link to financial statements.
7. LO6: Explain and prepare an adjusted trial balance.
8. LO7: Prepare financial statements from an adjusted trial balance.
9. LO8: Explain and prepare correcting entries. (Appendix 3A)
10 LO9: Identify and explain an alternative in recording prepaid and unearned revenues. (Appendix 3B)
11. Apart from everything previously mentioned, you will need to successfully and confidently answer the
questions relating to the topic material. Questions which will be attached here below and get answers similar to
those obtained here below, attached next-to/after the questions
If assets were $76,900 at August 31, 2026 and equity was $64,158* on the same date, liabilities would have
been the difference: $12,742. Arrow had a much stronger balance sheet at August 31, 2026 (the lower the total
liabilities as a percentage of assets, the stronger the balance sheet - - liabilities were 16.57% of total assets at
August 31, 2026 calculated as 12,742/76,900 and liabilities were 60.94% of total assets at September 30, 2026
calculated as 32,662/53,600). Equity decreased substantially because of the loss realized during September,
2026.

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