BU127 Lecture Notes - Lecture 4: Retained Earnings, Trial Balance, General Ledger
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BU127 Full Course Notes
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Document Summary
Chapter 4 adjustments, financial statements, and the quality of earnings. During the period (external transactions between business and external parties) At the end of the period (internal transactions) Close revenues, gains, expenses and losses to retained earnings. Because transactions occur over time, adjustments are required at the end of each fiscal period to get the revenues and expenses into the right period. A listing of individual accounts, usually in financial statement order (a, l, Ending debit or credit balances are listed in two separate columns. Total debit account balances should equal total credit account balances. If total debits do not equal total credits on the trial balances, errors have occurred in: Posting the correct dollar effects of a transaction. Or in copying ending balances from the ledger to the trial balance. The systematic and rational allocation of the cost of a long term asset to the multiple accounting periods during which it is used to generate revenue.
