MGAC01H3 Lecture Notes - Trial Balance, Accounting Information System, Financial Statement
Document Summary
It is important to understand the following terms: event, transaction, account, permanent and temporary accounts, ledger, journal, posting, trial balance, adjusting entries, financial statements, closing entries. The basic steps in the accounting cycle are: identification and measurement of transactions and other events, journalizing, posting, the unadjusted trial balance, adjustments, the adjusted trial balance, statement preparations, and closing. Record transactions in journals, post journal entries to ledger accounts, and prepare a trial balance. Explain the reasons for preparing adjusting entries. Adjustments achieve a proper matching of revenues and expenses. All revenue and expense account balances are transferred to the income summary account. Then it is transferred to the shareholders" equity account. Explain how inventory accounts are adjusted at year end. Prepare a 10-column work sheet and financial statements. An item should be recognized in the financial statements if it meets the definition of an element and is measurable.
