1. Intermediate Accounting I--Fall 2011 1-1 Intermediate Accounting I Session 1 The Accounting Process Fall 2011 Professor Bill O’Brien

2. Intermediate Accounting I--Fall 2011 1-2 Accounting (Bookkeeping) Cycle-modified n Analyze Transaction n Record and Post n Summarize Accounts n Unadjusted Trial Balance n Adjusting Journal Entries (AJE’s) n Adjusted Trial Balance n Prepare Income Statement n Closing Entries n Final Trial Balance n Prepare Balance Sheet, SCF and SSE

3. Intermediate Accounting I--Fall 2011 1-3 Financial Statement Relationships Balance SheetIncome StatementStatement of Cash Flows Stmt of Sharehldrs Eq. Current Assets Non- current Assets Current Liabilities Long- term Debt Equity Revenue Cost of Goods Sold (COGS) Gross Margin Operating Exps. Net Income Operating Cash Investing Cash Financing Cash Change in Cash Beginning Cash Ending Cash Beginning S/E Net Income Less: Dividends Ending S/E

4. Intermediate Accounting I--Fall 2011 1-4 The “T-Account” ASSETS & EXPENSES LIABILITIES, EQUITY & REVENUES Debit Credit

5. Intermediate Accounting I--Fall 2011 1-5 Close Worksheet

6. Intermediate Accounting I--Fall 2011 1-6 Adjusting Journal Entries n Accruals n Prepayments n Deferrrals n Cost Expirations

7. Intermediate Accounting I--Fall 2011 1-7 Cash versus Accrual n Cash basis: when cash actually flows n Accrual basis: when earned or incurred