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Management 1A- Chapter 4 Notes

by: Daniel Ochs

Management 1A- Chapter 4 Notes Management 1A

Daniel Ochs

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Chapter 4 Notes
Principles of Accounting
D.S. Litt
Class Notes
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Popular in Principles of Accounting

Popular in Business, management

This 2 page Class Notes was uploaded by Daniel Ochs on Friday April 15, 2016. The Class Notes belongs to Management 1A at University of California - Los Angeles taught by D.S. Litt in Spring 2016. Since its upload, it has received 16 views. For similar materials see Principles of Accounting in Business, management at University of California - Los Angeles.

Similar to Management 1A at UCLA

Popular in Business, management


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Date Created: 04/15/16
Friday, April 15, 2016 Management 1A Chapter 4 [Page 144-154] - Accounting Cycle [Page 144] - Closing Entries • Recognizes in the ledger the transfer of net income / loss and owner’s drawings shown in owner’s equity statement • The drawing, revenue, and expense accounts are nominal Asset accounts, liability accounts, and the owner’s capital account are permanent • - Closing the Books of a Sole Proprietorship • Debit each revenue account for its balance and credit Income Summary for total revenues Debit Income Summary for total expenses and credit each expense account for its • balance • Debit Income Summary and credit owner’s capital for the amount of net income; conversely, credit Income Summary and debit owner’s capital if a net loss exists • Debit owner’s capital for the balance in the owner’s drawing account and credit owner’s drawing for the same amount - Post-Closing Trial Balance • Proves equality of the permanent account balances that are carried forward into the next accounting period. - Steps in the Accounting Cycle • Analyze business transactions • Journalize the transactions • Post to ledger accounts • Prepare a trial balance • Journalize and post adjusting entries: Prepayments / Accruals • Prepare and adjusted trial balance 1 Friday, April 15, 2016 • Prepare financial statements: Income Statement, Owner’s Equity Statement, Balance Sheet • Journalize and post-closing entries • Prepare a post-closing trial balance • Reverse (optional step): Reverse certain adjustments in the next period - Correcting Entries • Errors that occur in recording transactions should be corrected as soon as discovered • Journalized and posted whenever an error is discovered - Classified Balance Sheet • Financial statements become more useful when the elements are classified into subgroups • Assets - Current Assets, Long-term Investments, P.P.E., Intangible Assets • Liabilities and Owner’s Equity - Current Liabilities, Long-term Liabilities, Owner’s Equity 2


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