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Accounting Cycle

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Example : Company A was incorporated on January 1, 2010 with an initial capital of 5,000 shares of common stock having $20 par value. During the first month of its operations, the company engaged in following transactions:

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Adjusting Entries There are following types of adjusting entries:

Accruals:These include revenues not yet received nor recorded and expenses not yet paid nor recorded. For example, interest expense on loan accrued in the current period but not yet paid.

Prepayments:These are revenues received in advance and recorded as liabilities, to be recorded as revenue and expenses paid in advance and recorded as assets, to be recorded as expense. For example, adjustments to unearned revenue, prepaid insurance, office supplies, prepaid rent, etc.

Non-cash:These adjusting entries record non-cash items such as depreciation expense, allowance for doubtful debts etc.

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Financial Statement Income Statement

Statement of Returned Earning

Balance Sheet

Cash Flow

Microsoft Excel Worksheet

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Closing Entries Temporary accounts include:

Revenue, Income and Gain Accounts

Expense and Loss Accounts

Dividend, Drawings or Withdrawals Accounts

Income Summary Account

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Post-Closing Trial Balance

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Thanks