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Chapter 4: Q13SE (page 219)

Review the steps in the accounting cycle, and answer the following questions: 1. What is the first step? 2. Are any steps optional? 3. Which steps are completed throughout the period? 4. Which steps are completed only at the end of the period? 5. What is the last step in the accounting cycle?

Short Answer

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(1)Start with the beginning account balances

(2) Enter the unadjusted trial balance on the worksheet and complete the worksheet

(3Journalizing transactions and posting to the accounts

(4)Adjusting the accounts, preparing the financial statements, and closing the accounts

(5) Prepare the post-closing trial balance.

Step by step solution

01

Explanation on First Step

In the first step of accounting cycle, beginning balance of each account is recorded in the account.

02

Explanation on Optional Step

The optional step in the accounting cycle is to enter the values in the unadjusted trial balance in the worksheet and complete it. This step can be avoided as preparing a worksheet is not mandatory.

03

Explanation on Steps Completed Through the Period

Recording and posting the journal entry into the accounts are the steps that are completed throughout the period. In simple words, steps 1 to 3 are completed during the period.

04

Explanation on Steps Completed at the End of Period

Recording and posting the adjusting entries, preparing the financial statements, and recording and closing entries are the steps that are completed at the end of the period.

05

Explanation on Last Step

The last step in the accounting cycle is related to preparing the post-closing trial balance of the business. It is prepared after recording and posting closing entries.

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Most popular questions from this chapter

What types of accounts are listed on the post-closing trial balance?

For each account listed, identify the category in which it would appear on a classified balance sheet. a. Office Supplies b. Interest Payable c. Retained Earnings d. Copyrights e. Land f. Accumulated Depreciation鈥擣urniture g. Land (held for long-term investment purposes) h. Unearned Revenue i. Notes Payable (due in six years)

For each account listed, identify whether the account would be included on a post-closing trial balance. Signify either Yes (Y) or No (N). a. Office Supplies b. Interest Expense c. Retained Earnings d. Dividends e. Service Revenue f. Accumulated Depreciation鈥擣urniture g. Rent Expense h. Unearned Revenue i. Accounts Payable

The adjusted trial balance of Stone Sign Company follows: Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation鈥擡quipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense鈥擡quipment Supplies Expense Balance \( 15,400 \) 85,500 \( 85,500 100 \) 7,000 3,800 4,300 4,200 800 48,800 17,300 1,400 3,700 1,500 1,400 60,000 300 400 Utilities Expense 600 Total STONE SIGN COMPANY Adjusted Trial Balance January 31, 2018 Requirements 1. Assume Stone Sign Company has a January 31 year-end. Journalize Stone鈥檚 closing entries at January 31. 2. How much net income or net loss did Stone Sign Company earn for the year ended January 31? How can you tell?

For each account listed, identify the category that it would appear on a classified balance sheet. Use the following categories: Current Assets; Long-term Investments; Property, Plant, and Equipment; Intangible Assets; Current Liabilities; Long-term Liabilities; and Stockholders鈥� Equity. If the item does not belong on the classified balance sheet, put an X. a. Land (used in operations) b. Accumulated Depreciation鈥擡quipment c. Common Stock d. Service Revenue e. Investment in Starbucks Corporation (to be held long-term) f. Accounts Receivable g. Equipment h. Buildings i. Notes Payable (due in 10 years) j. Unearned Revenue k. Cash l. Accounts Payable m. Prepaid Rent n. Dividends o. Land (held for investment purposes) p. Depreciation Expense.
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