1. Accounting Cycle
With horizontal worksheet (in place of journals, ledgers, trial balance) and Income Statement, Balance Sheet, Cash Flow Statement

2. Transactions that will be recorded
Daily entries
Adjusting entries
Recorded at end of accounting period when statements needed
Accrual of expenses – services received, no source document, not recorded previously (RE’s down as expense, payable up)
Accrual of revenues – services performed, no source document, not recorded previously, (RE’s up as revenue, receivable up)
Deferrals of revenue – collect cash before services are performed, “earning the unearned” (RE’s up as revenue, unearned revenue down)
Deferrals of expenses – purchase an asset, “assets used up” (RE’s down as expense, asset down)
Triggered by a source document
historical
Must impact the accounting equation
Must keep accounting equation in balance
Recorded on a regular basis during the accounting period

3. Horizontal worksheet
Set up major headings – “Assets = Liabilities + Stockholder’s Equity”
Set up ledger account titles as transactions are recorded
Record the amounts, positive or negative, for each transaction – daily and adjusting entries
Helpful next to retained earnings to record those items in the margin as revenues, expenses, dividends – helps later when income statement is prepared
When all transactions are recorded, total up each numerical column
Make sure the accounting equation balances
Then prepare the income statement, cash flow statement and balance sheet.

4. Income Statement compared to the cash flow statement
similarities
differences
Both are for a particular period of time – one month, one quarter, biannually or annually
The operating section of the cash flow statement is similar to items on the income statement
The cash flow statement (CF) is only about cash in and cash out. The income statement (IS) includes services received and services performed, whether or not cash is involved.
IS revenues earned are not necessarily equal to cash collected from customers on CF
IS expenses incurred are not equal to cash paid for expenses on CF
Investing and financing type transactions from CF are usually not also represented on the IS or shown in a different way.

5. Balance sheet
At one specific point in time --- the end of the accounting period.
The accounting equation – assets equals liabilities plus stockholder’s equity
Most assets are valued with the historical cost principle
Classified format – current and long-term
Assets include such things as – cash, accounts receivable, short term or long- term investments, land, buildings, equipment
Liabilities include such things as -- accounts payable, notes payable, salaries payable, interest payable, unearned revenue, bonds payable
Stockholder’s equity includes – common stock, retained earnings (revenues, expenses, dividends)