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Accounting Using Excel for Success

PowerPoint Presentation by:PowerPoint Presentation by:Douglas Cloud, Professor Emeritus Accounting, Pepperdine UniversityDouglas Cloud, Professor Emeritus Accounting, Pepperdine University

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Completing the Accounting Cycle

Student Version

21-24-2

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4-2

Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.

31-34-3

1End-of-Period Spreadsheet (Work Sheet)Exhibit 1

41-44-4

Prepare financial statements from adjusted account balances.

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4-4

51-54-5 to statement of owner’s equity

2Financial Statements Prepared from Work SheetExhibit 2

61-64-6

from the income statement

to the balance sheet

2Financial Statements Prepared from Work Sheet (continued)Exhibit 2

71-74-7

A classified balance sheet is a balance sheet that was expanded by adding subsections for current assets; property, plant, and equipment; and current liabilities.

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81-84-8

• Cash and other assets that are expected to be converted into cash, sold or used up usually within a year or less, through the normal operations of the business, are called current assets.

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• Property, plant, and equipment (also called fixed assets) include assets that depreciate over a period of time. Land is an exception as it is not subject to depreciation.

(continued)

91-94-9

• Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets are called current liabilities.

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• Liabilities not due for a long time (usually more than one year) are long-term liabilities.

• Owner’s equity is the owner’s right to the assets of the business.

101-104-10

from the statement of owner’s equity

2Financial Statements Prepared from Work Sheet (continued)Exhibit 2

111-114-11

Prepare closing entries.

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4-11

121-124-12

Accounts that are relatively permanent from year to year are called real accounts. Accounts that report amounts for only one period are called temporary accounts or nominal accounts.

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Closing Entries

131-134-13

Debit each revenue account for the amount of its balance, and credit Income Summary for the total revenue.

Fees Earned

Bal. 16,840

Rent Revenue

Bal. 120

Income Summary 16,840

120

16,960

3Flowchart of Closing Entries for NetSolutions Exhibit 4

141-144-14

Wages Expense

Rent Expense

Depreciation Expense

Utilities Expense

Supplies Expense

Insurance ExpenseBal. 200

Miscellaneous ExpenseBal. 455

Income Summary

Debit Income Summary for the total expenses and

credit each expense account for its balance.

16,960

Bal. 4,525

Bal. 1,600

Bal. 50

Bal. 985

Bal. 2,040

9,855

455

200

2,040

985

50

1,600

4,525

3Flowchart of Closing Entries for NetSolutions (continued)Exhibit 4

151-154-15

Chris Clark, Capital

Bal. 25,000

Chris Clark, Drawing

Bal. 4,000

Income Summary

16,9609,8557,105

7,105

Debit Income Summary for the

amount of its balance (in this case, the net

income) and credit the capital account.

3Flowchart of Closing Entries for NetSolutions (continued) Exhibit 4

161-164-16

Chris Clark, Capital

Bal. 25,0007,105

Chris Clark, Drawing

Bal. 4,000 4,000

4,000 Debit the capital account for the balance

of the drawing account, and credit

drawing for the same amount.

3Flowchart of Closing Entries for NetSolutions (continued) Exhibit 4

171-174-17

3Closing Entries for NetSolutions

Step 2

Step 3

Step 1

Step 4

Exhibit 5

181-184-18

After the closing entries are posted, all of the temporary accounts have zero balances.

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191-194-19

A post-closing trial balance is prepared after the closing entries have been posted. The purpose of the PCTB is to verify that the ledger is in balance at the beginning of the next period.

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201-204-20

3Post-Closing Trial BalanceExhibit 7

211-214-21

Describe the accounting cycle.

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4-21

221-224-22

The accounting process that begins with analyzing and journalizing transactions and ends with preparing the accounting records for the next period’s transactions is called the accounting cycle. There are ten steps in the accounting cycle.

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231-234-23

2. Transactions are posted to the ledger.3. An unadjusted trial balance is prepared.4. Adjustment data are assembled and

analyzed.5. An optional end-of-period spreadsheet

(work sheet) is prepared.

1. Transactions are analyzed and recorded in the journal.

(continued)

Accounting Cycle4

241-244-24

7. An adjusted trial balance is prepared.8. Financial statements are prepared.9. Closing entries are journalized and

posted to the ledger.10. A post-closing trial balance is prepared.

6. Adjusting entries are journalized and posted to the ledger.

Accounting Cycle (continued)4

251-254-25

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Illustrate the accounting cycle for one period.

4-25

261-264-26

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Journal entries for April, Kelly Consulting

Exhibit 9

271-274-27

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Journal entries for April, Kelly Consulting (continued)

Exhibit 9

281-284-28

5Unadjusted Trial Balance, Kelly ConsultingExhibit 10

291-294-29

5End-of-Period Spreadsheet (Work Sheet)Exhibit 11

4-29

301-304-30

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Adjusting Entries, Kelly Consulting

Exhibit 12

311-314-31

5Adjusted Trial Balance, Kelly ConsultingExhibit 13

321-324-32

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Financial Statements, Kelly ConsultingExhibit 14

331-334-33

5Financial Statements, Kelly Consulting (continued)Exhibit 14

341-344-34

Financial Statements, Kelly Consulting (continued)Exhibit 14

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351-354-35

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Closing Entries, Kelly ConsultingExhibit 15

361-364-36

5Post-Closing Trial Balance, Kelly ConsultingExhibit 16

371-374-37

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Explain what is meant by the fiscal year and the natural business year.

4-37

381-384-38

The annual accounting period adopted by a business is known as its fiscal year. When a business adopts a fiscal year that ends when business activities have reached the lowest point in its annual operation, such a fiscal year is also called the natural year.

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391-394-39

Financial History of a Business

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401-404-40

5Ledger, Kelly ConsultingExhibit 17

411-414-41

5Ledger, Kelly Consulting (continued)Exhibit 17

421-424-42

5Ledger, Kelly Consulting (continued)Exhibit 17

431-434-43

5Ledger, Kelly Consulting (continued)Exhibit 17

441-444-44