There are two ways in which a company may account for their inventory. They can use a perpetual or periodic inventory system. Let’s look at the characteristics of these two systems. Characteristics of the Perpetual and Periodic Inventory Systems A perpetual…
Every week, you run errands for your household. These errands may include buying products and services from local retailers, such as gas, groceries, and clothing. As a consumer, you are focused solely on purchasing your items and getting home to…
Figure 6.1 J&J Games. Proper recognition of merchandising transactions gives management a clear inventory picture to make informed business decisions. (credit: modification of “Video game retail store, consumerism at its finest” by Bas de Reuver/Flickr, CC BY 2.0) Chapter Outline 6.1 Compare and…
Describe and Prepare Closing Entries for a Business 5.2 Prepare a Post-Closing Trial Balance Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity Appendix: Complete a Comprehensive…
We have gone through the entire accounting cycle for Printing Plus with the steps spread over three chapters. Let’s go through the complete accounting cycle for another company here. The full accounting cycle diagram is presented in Figure 5.14. Figure 5.14 The Accounting…
In The Adjustment Process, we were introduced to the idea of accrual-basis accounting, where revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur. We also…
The ninth, and typically final, step of the process is to prepare a post-closing trial balance. The word “post” in this instance means “after.” You are preparing a trial balance after the closing entries are complete. Like all trial balances, the post-closing…
In this chapter, we complete the final steps (steps 8 and 9) of the accounting cycle, the closing process. You will notice that we do not cover step 10, reversing entries. This is an optional step in the accounting cycle…
Figure 5.1 Mark reviews the financial data from Supreme Cleaners. (credit left: modification of “Numbers and Finance” by “reynermedia”/Flickr, CC BY 2.0; credit right: modification of “Dry cleaned clothes (Unsplash)” by “m0851”/Wikimedia Commons, CC0) Chapter Outline 5.1 Describe and Prepare Closing Entries for…
Explain the Concepts and Guidelines Affecting Adjusting Entries Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries Record and Post the Common Types of Adjusting Entries Use the Ledger Balances to Prepare an Adjusted Trial Balance Prepare Financial…