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    Completion of The Accounting Cycle

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    api-202886197
    The Income Statement for Cruz Service Center is illustrated as follows. Current assets are cash and other assets converted into cash or used up in a relatively short period of time. Current liabilities are debts, usually due within one year.

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    Completion of The Accounting Cycle

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    api-202886197
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    The Income Statement for Cruz Service Center is illustrated as follows. Current assets are cash and other assets converted into cash or used up in a relatively short period of time. Current liabilities are debts, usually due within one year.

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    completion of the accounting cycle

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    The Income Statement for Cruz Service Center is illustrated as follows. Current assets are cash and other assets converted into cash or used up in a relatively short period of time. Current liabilities are debts, usually due within one year.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    175 views4 pages

    Completion of The Accounting Cycle

    Uploaded by

    api-202886197
    The Income Statement for Cruz Service Center is illustrated as follows. Current assets are cash and other assets converted into cash or used up in a relatively short period of time. Current liabilities are debts, usually due within one year.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Completion of the Accounting Cycle

    The work sheet is a columnar sheet of paper used to summarize information needed to make the adjusting and closing entries and to prepare the financial statements. An adjusted trial balance is the original trial balance plus or minus the adjustments. THE INCOME STATEMENT The information needed to prepare the income statement can be taken from the Income Statement columns in the work sheet. The income statement for Cruz Service Center is illustrated as follows: CRUZ SERVICE CENTER Income Statement For the month ended January 31, 20X1 Service Revenue Less Operating Expense: Salaries Rent Supplies Utilities Insurance Taxes Depreciation Equipment Miscellaneous Total Operating Expenses Net income P 21,910 P 5,070 3,000 2,380 2,100 600 200 175 950 14,475 P 7,435

    The capital statement (also called statement of owners equity) is a financial statement that summarizes the transactions affecting the owners capital account balance. CRUZ SERVICE CENTER Capital Statement For the month ended January 31, 20X1 Capital, January 1, 20X1 Net income for the month Less Withdrawal Increase in Capital Capital, January 31, 20X1 P 50,000 P7,435 3,000 4,435 P 54,435

    THE CLASSIFIED BALANCE SHEET A classified balance sheet subdivides the asset and liabilities in order to provide more specific information for the users of financial statement6s. Current assets are cash and other assets that are converted into cash or used up in a relatively short period of time, usually one year or less. Property, plant, and equipment are assets acquired for use in a business rather than for resale. Current liabilities are debts, usually due within one year, the payment of which normally will require the use of current assets. Long-term liabilities are those debts that will be paid after a relatively long period of time, usually more than one year. CRUZ SERVICE CENTER Balance Sheet January 31, 20X1 Assets Current assets: Cash Accounts Receivable Supplies Prepaid Insurance Prepaid Taxes Total Current Assets Property, Plant, and Equipment: Equipment Less Accumulated Depreciation Total Assets Liabilities Current Liabilities: Accounts Payable Notes Payable Salaries Payable Unearned Service Revenue Total Liabilities Capital J. dela Cruz, Capital Total Liabilities and Capital

    P 44,850 12,360 5,120 6,600 2,200 P 71,130 P 25,600 175

    25,425 P 96,555

    P 19,900 20,000 270 1,950 P 42,120

    54,435 P 96,555

    STATEMENT OF CASH FLOWS It states that cash flow information is useful in providing users of financial statements with a basis to assess the ability of the enterprise to generate cash and the need of the enterprise to utilize those cash flows.

    CRUZ SERVICE CENTER Statement of Cash Flows For the Month Ended January 31, 20X1 Cash flows from operating activities: Cash received from customers P 11,500 Payments for salaries and other operating expenses ( 20,850) Net cash used for operating activities Cash flows from investing activities: Cash paid purchase of plant assets Cash flows from financing activities: Cash investment by the owner P 50,000 Cash borrowed from the bank 20,000 Cash withdrawal by the owner ( 3,000) Cash provided by financing activities Net increase in cash Cash balance, January 1 Cash balance, January 31

    (P 9,350) ( 12,800)

    67,000 P 44,850 P 44,850

    Operating activities create revenues and expenses in the entitys major line of business. Investing activities increase or decrease the assets that the business has to work with. Financing activities obtain funds from investors and creditors needed launch and sustain the business. The closing entries are series of entries required at the end of the accounting period to bring the balances of the temporary accounts to zero so that they will be ready to receive data for the next accounting period. The steps in the closing process are as follows: 1. Closing the revenue Account(s). the balances in the revenue accounts are transferred to the Income Summary account by debiting each revenue account for the amount of its balance, and crediting the income summary account for the total revenue. 2. Closing the expense accounts. The balances in the expense accounts are transferred to the Income Summary account by debiting the income summary for the total expenses, and crediting each expense account for the amount of its balance.

    3. Closing the income summary account. The balance of the income summary account is transferred to the owners capital. 4. Closing the owners drawing account. The balance of the owners drawing account is transferred to the owners capital account by debiting the capital account for the amount of the withdrawals , and crediting the drawing account for its balance. A post-closing trial balance is the trial balance prepared after the adjusting and closing processes. Interim statements are the statements prepared at the middle of the year. Reversing entries- they reverse the effects of the adjusting entry to which they relate.

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