Adjusting entries are made at the end of the year to adjust the financial position of the enterprise according to the accrual basis of accounting.
Accounting rules regarding journal entries:
- Balance increases when: Assets, losses, and expenses get debited and liabilities, gains, and revenue get credited.
- Balance decrease when: Assets, losses, and expenses get credited and liabilities, gains, and revenue get debited.
Journal Entries:
It is a book of original entries. It records and summarizes the financial transaction of an entity chronologically, generally according to the dual aspect of accounting.
Adjusted
It is a statement that contains balances of all account after all the adjusting entries has been made.
Income Statement:
It is a financial statement that shows the
It is a financial statement that shows the amount of profit retained by the company for future unforeseen events.
Closing Entries:
These entries are made for those items whose balance needs to be zero for the next accounting period otherwise data from two accounting periods will get mixed.
Balance sheet:
Balance sheet shows the financial position of a firm. It consists of assets, liabilities, and the
1.
To prepare: Ledger account, according to balance column format.
2.
To prepare: Journal
3.
To prepare: An unadjusted trial balance.
4.
To prepare: Adjusting entry.
5.
To prepare: An adjusted trial balance, income statement, statement of retained earnings and balance sheet.
6.
To prepare: Closing entries.
7.
To prepare: A post closing trial balance.

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Chapter 3 Solutions
FINAN&MANAG ACCT (LL) W/ACCESS
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- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub

