Kế toán, kiểm toán - Chapter twenty three: Adjusting and closing the general ledger

CHAPTER TWENTY THREEADJUSTING AND CLOSING THE GENERAL LEDGER1. Journalize adjusting and closing entries.2. Post the adjusting and closing entries.3. Prepare a postclosing trial balance.ADJUSTING AND CLOSING THE GENERAL LEDGERObjectives:3Recording the Adjusting EntriesAdjusting entries are recorded in the general journal. The amounts are obtained from the Adjustments section of the worksheet.4Recording the Adjusting Entries (continued)5Recording the Adjusting Entries (continued)6Recording the Adjusting Entries (continued)7Recording the Adjusting Entries (continued)8Recording the Closing EntriesAfter the adjusting entries are posted, closing entries must be recorded. These entries reduce the balances of the temporary accounts to zero and transfer the results of operations to the capital account.9Recording the Closing Entries (continued)The first step is to close the revenue and other temporary accounts with credit balances. The worksheet provides the necessary information.10Recording the Closing Entries (continued)11Recording the Closing Entries (continued)The second step is to close the cost, expense, and other temporary accounts with debit balances. The worksheet provides the necessary information.12Recording the Closing Entries (continued)13Recording the Closing Entries (continued)The third step is to close the Income Summary account and transfer the net income to the capital account. The worksheet shows the net income for the period.14Recording the Closing Entries (continued)15Recording the Closing Entries (continued)The fourth step is to close the drawing account and transfer its balance to the capital account.16Recording the Closing Entries (continued)17Preparing the Postclosing Trial BalanceThe accounts that appear on the postclosing trial balance are the asset, liability, and owner’s capital accounts.Debits must equal credits to continue into the next fiscal period.18Accounting TerminologyAdjusting entriesClosing entries19Chapter SummaryAdjusting entries must be journalized and posted so that the amounts in the General Ledger will agree with the amounts reported on the financial statements.20Chapter Summary (continued)Adjusting entries are recorded in the General Journal and then posted to the proper General Ledger accounts. The information for these entries comes from the Adjustments section of the worksheet.21Chapter Summary (continued)After the adjusting entries are completed, it is necessary to journalize and post closing entries. These entries make the General Ledger ready to receive transactions for the next period.22Chapter Summary (continued)The first closing entry is used to close the temporary accounts with credit balances. The necessary information comes from the Income Statement Credit column of the worksheet.23Chapter Summary (continued)The second closing entry is used to close the temporary accounts with debit balances. The necessary information comes from the Income Statement Debit column of the worksheet.24Chapter Summary (continued)The third closing entry is used to close the Income Summary account and transfer the net income or net loss to the capital account.25Chapter Summary (continued)The fourth closing entry is used to close the drawing account and transfer its balance to the capital account.26Chapter Summary (continued)After the closing entries are posted, a postclosing trial balance is prepared to check the equality of the debits and credits in the accounts that remain open.27 Investigating on the InternetAs a research assignment, access the PEPSI® web site and report sources of information that might concern financial statements.281. Closing entries in the General Journal prepare the business for the next fiscal period.2. Temporary accounts have zero balances after closing activities. 3. Some permanent accounts are closed following the closing activities.Topic QuizAnswer the following true/false questions:TRUEFALSETRUE29(Return to Topic Quiz)3. Some permanent accounts are closed following the closing activities.FALSEAll the permanent accounts are open for the new fiscal period.30