Principles of Accounting Asst.Prof.Dr. Panchat Akarak p.thipnew1@hotmail.com School of Accounting Chiang Rai Rajabhat University Accounting I

Accounting Cycle 1 Adjusting Journal Entries Post Entries to Ledger Accounts Prepare Unadjusted Trial Balance Adjusting Journal Entries Prepare Adjusted Trial Balance 1 Record Journal Entries Prepare Financial Statement Record Reversing Entries/ Opening Entries Prepare Post. Closing Trial Balance Record Closing Entries

Step of booking Step 1 Recorded 1. General Journal Step 2 Posting 2. Ledger/ GL Step 3 Balance Accounts 3. Trial Balance Step 4 Recorded Adjusted 4. General Journal Step 5 Prepare worksheet 5. Working Paper Step 6 Prepare F/S 6. Financial Statement Step 7 Prepare Closing 7. General Journal Step 8 Recorded Opening/ 8. General Journal Reversing entries

The Accounting Cycle Summarized The Work Sheet 10 Columns The Trial Balance Columns The Adjustments Columns The Adjusted Trial Balance Columns The Income Statement Columns The Financial Position Statement Columns

The Accounting Cycle Summarized Preparing Financial Statements from the work sheet (or Working paper) Income Statement Financial Position Statement

The Accounting Cycle Summarized Journalizing Adjusting Entries the Closing Process Closing the Revenue Account(s) Closing the Expense Account(s) Closing the Profit and Loss Summary Account Closing the Owner’s Drawing Account Closing Process Summarized Post-Closing Trial Balance

Closing entries Dec. 31 Dr. Service Revenue xx Other Revenue xx Cr. Profit and Loss Summary Account xx (Income Summary) To close revenue accounts

Closing entries Dec. 31 Dr. Profit and Loss Summary Account xx (Income Summary) Cr. Payroll Expense xx Utilities Expense xx Supplies Expense xx Insurance Expense xx Depreciation Expense-Building xx Depreciation expense-Equipment xx To close expense accounts

Closing entries Dec. 31 (Profit or net income) Dr. Profit and Loss Summary Account xx (Income Summary) Cr. John Capital xx To close net income to capital

Closing entries Dec. 31 (Loss or net income) Dr. John Capital/Retained Earning xx Cr. Profit and Loss Summary Account xx (Income Summary) To close net income to capital

Closing entries Dec. 31 Dr. John Capital xx Cr. John Drawing xx To close the owner’s drawing account

Post-Closing Trial Balance A post-closing trial balance is taken after revenue, expense, and drawing accounts have been closed. Only asset, liability, and owner’s capital accounts appear on the post-closing trial balance. The post-closing trial balance serves as the start of the new accounting period.

Financial Statement Financial Position Statement -Liabilities -Assets -Liabilities -Owner’s Equity

Financial Position Statement Assets Liabilities & Equity Current Assets Current Liabilities Cash Xx Bank overdraft xx Accounts Receivable Accounts Payable Note Receivable Note Payable Supplies other Liabilities Noncurrent Assets Noncurrent Liabilities Land Loan Building-net Owner’s Equity Equipment-net Capital-John Total Assets Total Liabilities & Equity

The classified Financial Position Statement Current Assets such as; -Cash and Cash Equivalent -Accounts Receivable, -Note Receivable, -Prepaid Expenses -Accrued Revenue -Supplies on hand

The classified Financial Position Statement Noncurrent Assets such as; -Long term Investment -Land -Buildings -Machinery -Equipment -Accumulated Depreciation

The classified Financial Position Statement Current Liabilities such as; -Bank Overdraft -Accounts Payable, -Note Payable, -Accrued Expenses -Deferred Revenue -Shot term loan -Shot term other liabilities

The classified Financial Position Statement Noncurrent Liabilities such as; -Long term Loan -Note Payable-long term -Bond

Financial Statement Income Statement:- -Revenues -Expenses -Profit/Loss

Income Statement Expenses Revenues Cost of Service xx Revenues from Service Salaries Other revenues Rent expense Advertising Expenses Depreciation Expense Utilities Expenses Bad debt Net Profit Total

Reversing Entries Reversing entries reverse the effects of the adjusting entries Such as -Accrued Expense (Liabilities) -Accrued Revenues (Assets) -Prepaid Expense (Assets) (If recorded Expense) -Deferred Revenues (Liabilities) (If recorded Revenues)

Reversing Entries Accrued Expense (Liabilities) Adjusted (Dec. 31) Dr. Expense xx Cr. Accrued Expense xx Reversing (Jan 1) Dr. Accrued expense xx Cr. Expense xx

Reversing Entries Accrued Expense (Liabilities) Cash Payment (Feb 1) Dr. Expense xx Cr. Cash xx To recorded payment

Reversing Entries Accrued Revenues (Assets) Adjusted (Dec. 31) Dr. Accrued Revenues xx Cr. Revenues xx Reversing (Jan 1) Dr. Revenues xx Cr. Accrued Revenues xx

Reversing Entries Accrued Revenues (Assets) Cash Receivable (Feb 1) Dr. Cash xx Cr. Revenue xx

Reversing Entries Prepaid Expense (Assets) (Recorded Expense Only) Adjusted (Dec. 31) Dr. Prepaid Expense xx Cr. Expense xx Reversing (Jan 1) Dr. expense xx Cr. Prepaid Expense xx

Reversing Entries Deferred Revenues (Liabilities) (Recorded Revenues Only) Adjusted (Dec. 31) Dr. Revenues xx Cr. Deferred Revenues xx Reversing (Jan 1) Dr. Deferred Revenues xx Cr. Revenues xx

Opening Entries Jan. 1 Dr. Assets-Accounts name xx Cr. Liabilities- Accounts name xx Owner’s Equity xx To recorded opening entries

Opening Entries Jan.1 Dr. Cash xx Account Receivable xx Note Receivable xx Supplies on hand xx Cr. Account Payable xx Note Payable xx Accrued Expense xx Long term loan xx John Capital xx To recorded opening entries

Thank you for your Attention Q & A The End Thank you for your Attention Q & A