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... | period.
• Prepaid expenses: Prepaid expenses are assets paid for before their use. When they are used, this asset’s
value is reduced and an expense is recognized. Some examples include supplies, insurance, and
depreciation.
• Unearned revenues: These are customer advanced payments for product or services yet to be ... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "total_pages": 1055, "file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "... |
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4.3 Record and Post the Common Types of Adjusting Entries
• Rules for adjusting entries: The rules for recording adjusting entries are as follows: every adjusting entry
will have one income statement account and one balan... | {"moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "batch_upload": true, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc63... |
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• Adjusted trial balance: The adjusted trial balance lists all accounts in the general ledger, including
adjusting entries, which have nonzero balances. This trial balance is an important step in the accounting
process because it helps identify any com... | {"moddate": "2020-08-05T15:26:11-05:00", "uploaded_via": "batch_uploader", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-... |
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-0.092... | (loss) and dividends on the earnings the company maintains.
• Balance Sheet: The balance sheet visually represents the accounting equation, showing that assets
balance with liabilities and equity.
• 10-column worksheet: The 10-column worksheet organizes data from the trial balance all the way through
the financial ... | {"creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "... |
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A.
IRS (Internal Revenue Service)
B. SEC (Securities and Exchange Commission)
C.
FASB (Financial Accounting Standards Board)
D. FDIC (Federal Deposit Insurance Corporation)
3.
4.1 Revenues and expenses must be recorded in the accounting period in which they were earned or
incurred, no matter when ca... | {"creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_name": "FinancialAccounting-OP.pdf", "total_pages": 1055, "file_size_mb": 156.7, "file_type": ".pdf", "producer": "Prince 11 (www.princexml.com)", "uploaded_via": "batch_uploader", "title": "Principles of Accounting, V... |
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-0.04... | 1, and records financial data for that twelve-month consecutive period?
A.
B.
C.
D.
fixed year
interim period
calendar year
fiscal year
6.
4.2 Which type of adjustment occurs when cash is either collected or paid, but the related income or
expense is not reportable in the current period?
A. accrual
B. defe... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "total_pages": 1055, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploa... |
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-... | B. deferral
C. estimate
D.
cull
9.
4.2 If an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it?
A. accrual
B. deferral
C. estimate
D.
cull
10.
4.2 Rent collected in advance is an example of which of the following?
A. accrued expense
B. accrued revenue
C. deferred ex... | {"producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": ... |
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B. accrued revenue
C. deferred expense (prepaid expense)
D. deferred revenue (unearned revenue)
14.
4.3 What adjusting journal entry is needed to record depreciation expense for the period?
A. a debit to Depreciation Expense; a credit to Cash
B. a debit to Accumulated Depreciation; a credit to... | {"file_type": ".pdf", "batch_upload": true, "uploaded_via": "batch_uploader", "file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pd... |
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-0.08... | 16.
4.4 What critical purpose does the adjusted trial balance serve?
A.
B.
C.
D.
It proves that transactions have been posted correctly
It is the source document from which to prepare the financial statements
It shows the beginning balances of every account, to be used to start the new year’s records
It proves... | {"file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file... |
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0.03493596613407135,
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-0.07487... | 19.
4.5 On which financial statement would the Dividends account appear?
A. Balance Sheet
B.
Income Statement
C. Retained Earnings Statement
D. Statement of Cash Flows
20.
4.5 On which financial statement would the Accumulated Depreciation account appear?
A. Balance Sheet
B.
Income Statement
C. Retained Ear... | {"batch_upload": true, "total_pages": 1055, "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": ... |
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-0.117... | 267
3.
4.2 What parts of the accounting cycle require analytical processes, rather than methodical processes?
Explain.
4.
5.
4.2 Why is the adjusting process needed?
4.2 Name two types of adjusting journal entries that are commonly made before preparing financial
statements? Explain, with examples.
6.
7.
8.
... | {"creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "uploaded_via": "batch_uploader", "creationdate": "2019-04-24T... |
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0.04154083877801895,
0.03298906609416008,
0.06674443185329437,
0.035353194922208786,
0.007542076054960489,
0.06329283118247986,
-0.130893... | the impact, and how should it be recorded?
11.
4.3 If the Prepaid Insurance account had a balance of $12,000, representing one year’s policy premium,
which was paid on July 1, what entry would be needed to adjust the Prepaid Insurance account at the end of
December, before preparing the financial statements?
12.
... | {"file_size_mb": 156.7, "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloa... |
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0.07720864564180374,
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0.007543671876192093,
0.036351438611745834,
0.10517650097608566,
-0.05582677200436592,
0.04857770353555679,
-0.... | appear: (A) Sales Revenue; (B) Unearned Rent Revenue; (C) Prepaid Advertising; (D) Advertising Expense; (E)
Dividends; (F) Cash.
Exercise Set A
EA1.
4.2 Identify whether each of the following transactions, which are related to revenue recognition, are
accrual, deferral, or neither.
A.
B.
C.
D.
sold goods to c... | {"total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "upload_timestamp": "2026... |
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0.02034553326666355,
0.019344156607985497,
0.02106858231127262,
0.016676850616931915,
0.013043273240327835,
-0.021121898666024208,
-0.006197725888341665,
0.09150227904319763,
0.08793553709983826,
-0.006119921337813139,
0.04595613479614258,
-0.093... | Chapter 4 The Adjustment Process
EA3.
4.2 Identify which type of adjustment is indicated by these transactions. Choose accrued revenue,
accrued expense, deferred revenue, or deferred expense.
A.
B.
C.
D.
rent paid in advance for use of property
cash received in advance for future services
supplies inventory p... | {"creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_name": "FinancialAccounting-OP.pdf", "total_pages": 1055, "uploaded_via": "batch_uploader", "sour... |
62e7e2cd-24d9-473b-91d3-d39e3e73f93c | [
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0.08418913930654526,
-0.021073412150144577,
-0.03012879379093647,
-0.025473838672041893,
-0.02170507423579693,
0.00014340097550302744,
-0.0021197423338890076,
0.01742440089583397,
0.08429399877786636,
0.03381462022662163,
-0.014245615340769291,
-0.009434406645596027,
... | that time. Based on the information provided:
A. Make the December 31 adjusting journal entry to bring the balances to correct.
B. Show the impact that these transactions had.
EA6.
4.3 On July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services.
During the period, the company co... | {"creationdate": "2019-04-24T10:32:54-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "total_pages": 1055, "batch_upload": true, "file_name": "FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_size_... |
7d1cd595-b4ed-4b86-be32-77c72898e9f0 | [
-0.03850765898823738,
0.058594319969415665,
-0.04211677983403206,
0.01809476688504219,
-0.010718259960412979,
-0.008934207260608673,
0.05706598237156868,
0.05602412670850754,
-0.03337632119655609,
0.037201888859272,
0.07936087995767593,
-0.029379749670624733,
0.0395529568195343,
-0.0594856... | account at that time. Based on the information provided, make the December 31 adjusting journal entry to
bring the balances to correct.
EA8.
4.3 Supplies were purchased on January 1, to be used throughout the year, in the amount of $8,500.
On December 31, a physical count revealed that the remaining supplies totale... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "uploaded_via": "batch_uploader", "file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Acco... |
6eb948d7-dfa2-4bd2-94e6-6f58a1c1ae14 | [
0.03267165273427963,
0.07010257989168167,
-0.008161833509802818,
0.015616648830473423,
-0.03364406153559685,
0.006467921193689108,
-0.02700071781873703,
0.03656396269798279,
-0.007417753338813782,
0.05268995463848114,
0.043189339339733124,
-0.024401795119047165,
0.06299392879009247,
-0.110... | B. December 31, physical count of remaining supplies, $800
EA10.
4.3 Prepare journal entries to record the following adjustments.
A.
Insurance that expired this period, $18,000
B. Depreciation on assets, $4,800
C.
Salaries earned by employees but unpaid, $1,200
This OpenStax book is available for free at http:/... | {"moddate": "2020-08-05T15:26:11-05:00", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc6... |
54664d5e-c20e-49c9-8a34-564ed877c004 | [
-0.057123664766550064,
0.10794392973184586,
-0.03501048684120178,
-0.06513522565364838,
-0.054423749446868896,
0.07777190953493118,
0.04839116334915161,
0.05024838075041771,
0.022529281675815582,
0.025867220014333725,
0.07043562829494476,
-0.05785470828413963,
0.014091772958636284,
-0.1160... | EA13.
4.4 Prepare an adjusted trial balance from the following account information, considering the
adjustment data provided (assume accounts have normal balances).
Adjustments needed:
Salaries due to administrative employees, but unpaid at period end, $2,000
Insurance still unexpired at end of the period, $12,000... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "batch_upload": true, "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "... |
dabb4032-cab7-4b4a-8eb9-74d334459ca1 | [
-0.07829874753952026,
0.08527276664972305,
-0.02638951875269413,
-0.07661093771457672,
-0.00895283930003643,
0.049906786531209946,
0.053629543632268906,
0.008520516566932201,
0.020633922889828682,
0.06722446531057358,
0.07569640874862671,
-0.04661524295806885,
0.016572589054703712,
-0.0727... | B.
C.
received cash for legal services performed last month
received cash from clients for future services to be provided
D. provided legal services to client, to be collected next month
EB2.
4.1 Identify whether each of the following transactions, which are related to expense recognition, are
accrual, deferral,... | {"creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "file_type": ".pdf", "total_pages": 1055, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "ti... |
9e78a8ea-947f-4772-9911-aff7197d22bd | [
-0.034030649811029434,
0.07051301002502441,
-0.017318803817033768,
-0.014564923010766506,
0.03022352047264576,
0.07863036543130875,
0.039421938359737396,
0.0345250740647316,
-0.027634697034955025,
0.047396469861269,
0.07086268812417984,
-0.012660415843129158,
0.07902882248163223,
-0.114688... | Liabilities + Equity (assume normal balances).
Impact 1
Impact 2
A.
B.
C.
D.
Prepaid Insurance adjusted from $5,000 to $3,600
Interest Payable adjusted from $5,300 to $6,800
Prepaid Insurance adjusted from $18,500 to $6,300
Supplies account balance $500, actual count $220
Table 4.5
EB4.
4.2 What two accoun... | {"moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader",... |
64d0f6a8-0a26-460c-8dc0-f18cca74d53c | [
-0.04445018246769905,
0.0942816361784935,
0.022798461839556694,
0.031819481402635574,
-0.031050926074385643,
-0.002971249632537365,
-0.016378989443182945,
-0.01666284166276455,
-0.03955327719449997,
0.06365939974784851,
0.03893430531024933,
-0.027188628911972046,
0.010206909850239754,
-0.0... | that time. Based on the information provided,
A. Make the December 31 adjusting journal entry to bring the balances to correct.
B. Show the impact that these transactions had.
EB6.
4.3 On September 1, a company received an advance rental payment of $12,000, to cover six months’
rent on an office building. There wa... | {"creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.pri... |
540c8b58-d35a-43a3-80e8-ece0e802b5c7 | [
-0.08304567635059357,
0.11631137132644653,
-0.025431031361222267,
-0.04554006829857826,
-0.060897406190633774,
0.05163406580686569,
-0.0010253371438011527,
0.05617225170135498,
-0.00034445052733644843,
0.030672790482640266,
0.021710993722081184,
-0.04640020802617073,
0.04479142650961876,
-... | balance in the Salaries Payable account at that time. Based on the information provided, make the December
31 adjusting journal entry to bring the balances to correct.
EB8.
4.3 On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services.
During the period, the company completed... | {"batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "file_type": ".pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529",... |
a0fa7680-7a86-4fb5-b3ec-420b2ea9208d | [
-0.025227943435311317,
0.1092410609126091,
0.017772765830159187,
-0.028961390256881714,
-0.03632856160402298,
0.038536712527275085,
-0.02707153931260109,
0.06248972564935684,
-0.05005337670445442,
0.03754207119345665,
0.03395015373826027,
-0.08242185413837433,
0.02473629266023636,
-0.13674... | B. December 31, remaining unexpired balance of insurance, $3,000
272
Chapter 4 The Adjustment Process
EB10.
4.3 Prepare journal entries to record the following adjustments:
A.
B.
C.
revenue earned but not collected, nor recorded, $14,000
revenue earned that had originally been collected in advance, $8,500
tax... | {"file_type": ".pdf", "moddate": "2020-08-05T15:26:11-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "ba... |
88e93dab-597c-4b83-b253-7326a87d1315 | [
-0.03427393361926079,
0.07217719405889511,
0.009021875448524952,
-0.04842980578541756,
-0.004441855475306511,
0.08457119762897491,
0.06587135791778564,
0.028128376230597496,
0.006708619650453329,
0.02846933715045452,
0.08302052319049835,
-0.07431845366954803,
0.004566681105643511,
-0.07670... | EB13.
4.4 Prepare an adjusted trial balance from the following account information, considering the
adjustment data provided (assume accounts have normal balances).
Adjustments needed:
• Physical count of supplies inventory remaining at end of period, $2,150
• Taxes payable at end of period, $3,850
This OpenStax ... | {"batch_upload": true, "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf"... |
01b89806-3b8a-49ad-9adc-2eb96f6016df | [
-0.07890886813402176,
0.01621140167117119,
-0.0036874962970614433,
-0.06931152939796448,
-0.035132862627506256,
0.049559637904167175,
0.04192643612623215,
0.0087813138961792,
0.058558620512485504,
0.04984677955508232,
0.08440034091472626,
-0.07713885605335236,
0.0030221245251595974,
-0.057... | A. earn now, collect now
B. earn now, collect later
C. earn later, collect now
PA2.
4.1 To demonstrate the difference between cash account activity and accrual basis profits (net
income), note the amount each transaction affects cash and the amount each transaction affects net income.
A. paid balance due for acco... | {"moddate": "2020-08-05T15:26:11-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Account... |
a8f8d786-255e-4f6b-867c-d22f8fd17f2c | [
-0.02352607063949108,
0.06614876538515091,
0.05175326019525528,
-0.027867743745446205,
0.002517566317692399,
0.04956469684839249,
0.022728703916072845,
0.014575023204088211,
0.012202835641801357,
0.05620798096060753,
0.07858563214540482,
-0.044187333434820175,
0.04327460378408432,
-0.10101... | C.
D.
cash received in advance for future services
supplies inventory purchased
fees earned but not yet collected
E. depreciation expense recorded
F.
insurance paid for future periods
274
Chapter 4 The Adjustment Process
PA4.
4.2 Identify which type of adjustment is associated with this account, and what is ... | {"creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "producer": "Prince 11 (www.princexml.com)", "... |
43a27a68-0de5-41f7-8bf2-87597dbb5c6f | [
-0.012907988391816616,
0.07942503690719604,
0.020810892805457115,
-0.02852182276546955,
-0.038726624101400375,
0.05561182275414467,
-0.033105600625276566,
0.03298715874552727,
-0.022635553032159805,
0.07109028846025467,
0.013233911246061325,
-0.03193582221865654,
0.07615315169095993,
-0.09... | Prepaid Insurance adjusted from $18,500 to $6,300
Supplies account balance $500, actual count $220
Table 4.6
PA6.
4.2 What two accounts are affected by each of these adjustments?
A. billed customers for services provided
B. adjusted prepaid insurance to correct
C.
D.
E.
recorded depreciation expense
recorded... | {"file_size_mb": 156.7, "moddate": "2020-08-05T15:26:11-05:00", "file_name": "FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "file_type": ".pdf", "file_hash": "89738e550... |
5956bda2-d9f9-4095-a727-f6da9e34085e | [
-0.012065351940691471,
0.07972829788923264,
-0.023228265345096588,
-0.06612543761730194,
-0.038227710872888565,
0.011129537597298622,
0.0357942171394825,
0.06973728537559509,
-0.04223155230283737,
0.1278502345085144,
-0.001677279477007687,
-0.027432821691036224,
0.045902326703071594,
-0.05... | to make the December 31 adjusting journal entries.
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 4 The Adjustment Process
275
PA9.
4.3 Use the following account T-balances (assume normal balances) and correct balance information
to make the December 31 adjusting journal e... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "file_type": ".pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "... |
4e6f0454-3a4f-4f8c-ab0c-4328972cb609 | [
-0.04201740771532059,
0.1019584909081459,
0.007429362274706364,
-0.007094950415194035,
-0.0328654982149601,
0.03276372328400612,
-0.009073540568351746,
0.03562333807349205,
-0.009293785318732262,
0.06988532841205597,
0.05922694876790047,
-0.06043976917862892,
0.02814629301428795,
-0.133413... | Insurance, post any entries that affect the account, and tally the ending balance for the account (assume
Prepaid Insurance beginning balance of $9,000).
A. April 1, paid cash for one-year policy, $18,000
B. December 31, unexpired premiums, $4,500
PA12.
4.3 Determine the amount of cash expended for Salaries during... | {"creator": "DocBook XSL Stylesheets V1.79.1", "title": "Principles of Accounting, Volume 1: Financial Accounting", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "file_name": "FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "upload_timestamp": "2026... |
82b93e95-1274-46c1-a8c8-deb927ee3f42 | [
-0.01653025858104229,
0.09824348986148834,
0.05512848496437073,
-0.035671867430210114,
-0.024684466421604156,
0.011419870890676975,
-0.04080495983362198,
0.030583787709474564,
-0.04307772219181061,
0.04723042994737625,
0.07642656564712524,
-0.0034868265502154827,
0.045713745057582855,
-0.1... | Chapter 4 The Adjustment Process
PA14.
4.4 Prepare an adjusted trial balance from the adjusted account balances; solve for the one missing
account balance: Cash (assume accounts have normal balances).
PA15.
4.4 Prepare an adjusted trial balance from the following account information, considering the
adjustment da... | {"uploaded_via": "batch_uploader", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "file_type": ".pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "batch_upload": true, "file_size_mb": ... |
234afe50-7d6d-47e3-a871-2268602260c3 | [
-0.01471633743494749,
0.08623659610748291,
0.04704515263438225,
-0.021547583863139153,
-0.021303996443748474,
0.04630069062113762,
0.03942883759737015,
0.024938752874732018,
0.03394553065299988,
0.028421787545084953,
0.08135220408439636,
-0.0326591357588768,
0.008462375029921532,
-0.093460... | the adjustment data provided (assume accounts have normal balances). Equipment was recently purchased,
so there is neither depreciation expense nor accumulated depreciation.
Adjustments needed:
• Remaining unpaid Salaries due to employees at the end of the period, $0
• Accrued Interest Payable at the end of the per... | {"batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "file_size_mb": 156.7, "source": "downloads... |
d176662e-3c33-4967-ab36-bf663c5941a6 | [
-0.026405686512589455,
0.05620646849274635,
0.0011209381045773625,
-0.07090695947408676,
-0.05301295965909958,
0.023970777168869972,
0.09408725053071976,
0.022017518058419228,
0.018145224079489708,
0.03287307918071747,
0.05596505478024483,
-0.0891214907169342,
-0.0018476912518963218,
-0.00... | B Problem Set B
PB1.
4.1 Identify whether each of the following transactions, which are related to revenue recognition, are
accrual, deferral, or neither.
A. expense now, pay now
B. expense later, pay now
C. expense now, pay later
PB2.
4.1 To demonstrate the difference between cash account activity and accrual ... | {"file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".pdf", ... |
93d4c505-910b-4f74-947f-a50ff7a20684 | [
0.0004384233325254172,
0.03532100468873978,
0.008637454360723495,
0.03217361494898796,
-0.02605626732110977,
0.012535212561488152,
0.01939288154244423,
-0.012292499653995037,
0.04400215670466423,
0.059009481221437454,
0.041647132486104965,
-0.06614349782466888,
0.039181530475616455,
-0.057... | accrued expense, deferred revenue, or deferred expense.
A.
B.
C.
D.
fees earned and billed, but not collected
recorded depreciation expense
fees collected in advance of services
salaries owed but not yet paid
E. property rentals costs, prepaid for future months
F.
inventory purchased for cash
PB4.
4.2 Iden... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "batch_upload": true, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file... |
9b97219c-6522-4866-83fb-05c950055a60 | [
0.011724906973540783,
0.06958480179309845,
0.020232217386364937,
0.025237727910280228,
-0.045167963951826096,
0.056446369737386703,
-0.030985895544290543,
0.042095847427845,
-0.019753554835915565,
0.07804256677627563,
0.0216665156185627,
-0.02873975969851017,
0.06527681648731232,
-0.069737... | Unearned Rent adjusted from $15,000 to $9,500
Recorded salaries payable of $3,750
Prepaid Rent adjusted from $6,000 to $4,000
Recorded depreciation expense of $5,500
A.
B.
C.
D.
Table 4.7
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 4 The Adjustment Process
279
PB6... | {"producer": "Prince 11 (www.princexml.com)", "file_size_mb": 156.7, "uploaded_via": "batch_uploader", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "file_name": "FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash":... |
3ea56140-134d-48dc-80b0-67b2a2d02997 | [
-0.04636756703257561,
0.07013899087905884,
-0.05872975289821625,
-0.01576690748333931,
-0.09301261603832245,
0.02625710517168045,
0.004189536906778812,
0.07017017155885696,
0.0024996905121952295,
0.06511304527521133,
0.00196642498485744,
-0.07453876733779907,
0.02061484567821026,
-0.034345... | B. Determine the net book value (NBV) of the asset on December 31.
• Cost of asset, $195,000
• Accumulated depreciation, beginning of year, $26,000
• Current year depreciation, $13,000
PB8.
4.3 Use the following account T-balances (assume normal balances) and correct balance information
to make the December 31 ad... | {"file_type": ".pdf", "file_size_mb": 156.7, "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "total_pages": 1055, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8... |
cbcd912d-d842-4bbb-9a24-6a51f1d97e04 | [
-0.018478212878108025,
0.09676826745271683,
-0.02853521704673767,
-0.029356203973293304,
-0.030282028019428253,
0.037472203373909,
0.03221211954951286,
0.0504620261490345,
0.006443466059863567,
0.07041839510202408,
0.05398370698094368,
-0.01826959103345871,
0.0435965396463871,
-0.081383019... | B. December 31, actual count of supplies, $8,500
PB11.
4.3 Prepare journal entries to record the following transactions. Create a T-account for Unearned
Revenue, post any entries that affect the account, tally ending balance for the account (assume Unearned
Revenue beginning balance of $12,500).
A. May 1, collecte... | {"uploaded_via": "batch_uploader", "title": "Principles of Accounting, Volume 1: Financial Accounting", "moddate": "2020-08-05T15:26:11-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "batch_upload": true, "file_hash": "89738e550d63820fb... |
e66bea13-5d29-41d5-a075-201cbfcb50b5 | [
0.01685488596558571,
0.08675328642129898,
0.05534611642360687,
-0.020517027005553246,
-0.022152479737997055,
0.027378328144550323,
-0.02675093710422516,
0.02225874364376068,
-0.00392979197204113,
0.05702314153313637,
0.07448334246873856,
-0.014725005254149437,
0.06790933012962341,
-0.06133... | A. depreciation on buildings and equipment, $17,500
B. advertising still prepaid at year end, $2,200
C.
interest due on notes payable, $4,300
D. unearned rental revenue, $6,900
E.
interest receivable on notes receivable, $1,200
PB14.
4.4 Prepare an adjusted trial balance from the adjusted account balances; solv... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "file_type": ".pdf", "total_pages": 1055, ... |
88c70576-3361-452d-bc60-7cc25f418c14 | [
0.01873074844479561,
0.09491883218288422,
0.02052532508969307,
0.026991449296474457,
-0.045334331691265106,
0.05121183395385742,
0.03678052872419357,
0.056771792471408844,
-0.007337901275604963,
0.0005770816933363676,
0.045574478805065155,
-0.036574821919202805,
0.029359055683016777,
-0.08... | purchased, so there is neither depreciation expense nor accumulated depreciation.
Adjustments needed:
• Physical count of supplies inventory remaining at end of period, $3,300
• Customer fees collected in advance (payments were recorded as Fees Earned), $18,500
PB16.
4.4 Prepare an adjusted trial balance from the ... | {"file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "total_page... |
cd219c65-31a8-4174-b06a-ab6c5c67bdfa | [
-0.04194019362330437,
0.0832316130399704,
0.038453154265880585,
-0.015509089455008507,
0.005932221654802561,
0.014796210452914238,
0.04266053065657616,
0.11336099356412888,
-0.0029615170788019896,
0.03421866521239281,
0.01115682628005743,
-0.024375755339860916,
-0.05516737326979637,
-0.054... | Chapter 4 The Adjustment Process
PB18.
4.5 From the following Company Z adjusted trial balance, prepare simple financial statements, as
follows:
A.
Income Statement
B. Retained Earnings Statement
C. Balance Sheet
Thought Provokers
TP1.
4.1 Assume you are the controller of a large corporation, and the chief ex... | {"creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_size_mb": 156.7, "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "source_file": ... |
f8d24d1b-6a6a-49f2-9300-962a3cead6e7 | [
-0.06930093467235565,
0.08617712557315826,
-0.041724078357219696,
-0.004991819150745869,
-0.04847095534205437,
0.010629755444824696,
0.016461536288261414,
0.013640600256621838,
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0.05488259717822075,
-0.08563457429409027,
-0.011304760351777077,
-0.... | searchedgar/companysearch.html), and locate the latest Form 10-K for a company you would like to analyze.
Submit a short memo:
• State the name and ticker symbol of the company you have chosen.
• Review the company’s end-of-period Balance Sheet for the most recent annual report, in search of
accruals and deferrals.... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\Fina... |
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-0.08126... | be news reports, Securities and Exchange Commission violation reports, fraud charges, or any other source of
alleged financial statement judgement lapse.
• Write down the name and industry type of the company you are discussing.
• Describe the purported indiscretion, and how it relates to mis-reporting earnings or s... | {"batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "uploaded_via": "batch_uploader", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\\accounti... |
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-0.12... | balance. The company is facing a slow year, and after your adjusting entries, the financial statements are
accurately reflecting that fact. However, as you are discussing the matter with your boss, the chief executive
officer (CEO), he suggests that you have the power to make further adjustments to the statements, an... | {"file_type": ".pdf", "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "title": "Principles of Accounting, Vol... |
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TP5.
4.5 Search the SEC website (https://www.sec.gov/edgar/searchedgar/companysearch.html) and
locate the latest Form 10-K for a company you would like to analyze. Submit a short memo:
• State the name and ticker symbol of the company you have chosen.
• Review the company’s end-of-per... | {"batch_upload": true, "file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "creator": "DocBook XSL Stylesheets V1.79.1", "upload_time... |
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... | Completing the Accounting Cycle
Figure 5.1 Mark reviews the financial data from Supreme Cleaners. (credit left: modification of “Numbers and
Finance” by “reynermedia”/Flickr, CC BY 2.0; credit right: modification of “Dry cleaned clothes (Unsplash)” by
“m0851”/Wikimedia Commons, CC0)
Chapter Outline
5.1 Describe an... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V... |
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... | including purchasing equipment and supplies, paying his employees, and providing dry-cleaning services to
customers. Because Mark had established a sound accounting system to keep track of his daily transactions,
he was able to prepare complete and accurate financial statements showing his company’s progress and
fin... | {"batch_upload": true, "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "producer": "Prince 11 (www.princexml.com)", "total_pages": 1055, "source_file": "downloads\\business\\accounting\\Fina... |
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286
Chapter 5 Completing the Accounting Cycle
5.1 Describe and Prepare Closing Entries for a Business
In this chapter, we complete the final steps (steps 8 and 9) of the accounting cycle, the closing process. You will
notice that we do not cover step 10, reversing entries. This is an option... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "creator": "DocBook XSL Stylesheets V1.79.1", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "moddate": "2020-08-05T15:26:11-05:00", "fi... |
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0.05893757566809654,
-0.015376579947769642,
-0.03003123216331005,
-0.015578456223011017,
-0.058... | closing entries have been recorded.
Figure 5.2
Final steps in the accounting cycle. (attribution: Copyright Rice University, OpenStax, under CC
BY-NC-SA 4.0 license)
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Completing the Accounting Cycle
287
T H I N K I T T H... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "tot... |
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0.0018363199196755886,
-0.020565183833241463,
-0.10... | revenue account on the post-closing trial balance? How do you fix this error?
Introduction to the Closing Entries
Companies are required to close their books at the end of each fiscal year so that they can prepare their
annual financial statements and tax returns. However, most companies prepare monthly financial st... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "total_pages": 1055, "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com)", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0... |
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0.05505405366420746,
0.032437700778245926,
-0.029142465442419052,
-0.048... | can compare performance across periods, particularly with income. It also helps the company keep thorough
records of account balances affecting retained earnings. Revenue, expense, and dividend accounts affect
retained earnings and are closed so they can accumulate new balances in the next period, which is an
applic... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "batch_uplo... |
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0.04181535169482231,
-0.03580106794834137,
-0.05505988374352455,
-0.0598... | of a current period to the beginning of the next period.
For example, a store has an inventory account balance of $100,000. If the store closed at 11:59 p.m. on January
31, 2019, then the inventory balance when it reopened at 12:01 a.m. on February 1, 2019, would still be
$100,000. The balance sheet accounts, such a... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24T10... |
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-0.082... | instead of merging it into January’s income and thus providing invalid information solely for the month of
February.
However, if the company also wanted to keep year-to-date information from month to month, a separate set
of records could be kept as the company progresses through the remaining months in the year. Fo... | {"total_pages": 1055, "file_size_mb": 156.7, "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\F... |
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-0.... | totaled $70,000.
You also review the following information:
The next day, January 1, 2019, you get ready for work, but before you go to the office, you decide to review
your financials for 2019. What are your year-to-date earnings? So far, you have not worked at all in the current
year. What are your total expenses... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "file_size_mb": 156.7, "file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP... |
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0.007246044464409351,
-0.009091179817914963,
-... | the value of your assets and liabilities now zero because of the start of a new year? Your car, electronics, and
furniture did not suddenly lose all their value, and unfortunately, you still have outstanding debt. Therefore,
these accounts still have a balance in the new year, because they are not closed, and the bal... | {"creationdate": "2019-04-24T10:32:54-05:00", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "file_size_mb"... |
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-0.004437475930899382,
-0.06690879166126251,
-0.... | L I N K T O L E A R N I N G
Understanding the accounting cycle and preparing trial balances is a practice valued internationally. The
Philippines Center for Entrepreneurship and the government of the Philippines hold regular seminars
going over this cycle with small business owners. They are also transparent wit... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".pdf", "batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "up... |
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-0.03467433154582977,
-0.0... | This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Completing the Accounting Cycle
289
Permanent (real) accounts are accounts that transfer balances to the next period and include balance sheet
accounts, such as assets, liabilities, and stockholders’ equity. These accounts wil... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "uploaded_via": "batch_uploader", "total_pages": 1055, "producer":... |
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-0.07... | to Income Summary, and Income Summary and Dividends are closed to the permanent account, Retained
Earnings.
Figure 5.3
Location Chart for Financial Statement Accounts. (attribution: Copyright Rice University,
OpenStax, under CC BY-NC-SA 4.0 license)
The income summary account is an intermediary between revenues an... | {"file_size_mb": 156.7, "file_type": ".pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "batch_upload": true, "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "file_name": "FinancialAcc... |
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0.025741340592503548,
-0.03350690379738808,
-0.009585516527295113,
-0.0813... | until the closing entries are prepared. Therefore, it will not appear on any trial balances, including the adjusted
trial balance, and will not appear on any of the financial statements.
You might be asking yourself, “is the Income Summary account even necessary?” Could we just close out
revenues and expenses direct... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "file_size_mb": 156.7, "title": "Princi... |
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-0.0696... | balance is in retained earnings.
290
Chapter 5 Completing the Accounting Cycle
Y O U R T U R N
Permanent versus Temporary Accounts
Following is a list of accounts. State whether each account is a permanent or temporary account.
A.
rent expense
B. unearned revenue
C. accumulated depreciation, vehicle
D. comm... | {"creator": "DocBook XSL Stylesheets V1.79.1", "upload_timestamp": "2026-02-07T07:23:08.167529", "batch_upload": true, "file_size_mb": 156.7, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "uploaded_vi... |
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-0.11649... | account. The second entry closes expense accounts to the Income Summary account. The third entry closes
the Income Summary account to Retained Earnings. The fourth entry closes the Dividends account to Retained
Earnings. The information needed to prepare closing entries comes from the adjusted trial balance.
Let’s e... | {"uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26:11-05:00", "batch_upload": true, "file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload... |
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0.00984794832766056,
-0.04575262... | CC BY-NC-SA 4.0 license)
The first entry requires revenue accounts close to the Income Summary account. To get a zero balance in a
revenue account, the entry will show a debit to revenues and a credit to Income Summary. Printing Plus has
$140 of interest revenue and $10,100 of service revenue, each with a credit bal... | {"file_type": ".pdf", "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "producer": "Prince 11 (www.princexml.com)", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a... |
c44904a3-6f18-4505-83a9-3726fdabce89 | [
-0.03663325309753418,
0.053914088755846024,
-0.01505529135465622,
-0.025291774421930313,
0.012967153452336788,
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0.00931242760270834,
0.022938113659620285,
0.035051677376031876,
-0.08729866147041321,
-0.0010552604217082262,
-0... | The second entry requires expense accounts close to the Income Summary account. To get a zero balance in
an expense account, the entry will show a credit to expenses and a debit to Income Summary. Printing Plus
has $100 of supplies expense, $75 of depreciation expense–equipment, $5,100 of salaries expense, and $300 o... | {"file_name": "FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_siz... |
ae4b7d99-0af8-4ab2-ab9b-0fea724dc201 | [
-0.01844310574233532,
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-0.005936716217547655,
-0.02120388299226761,
0.01218442153185606,
0.0006013248930685222,
0.0292656347155571,
-0.0006546542863361537,
0.040559202432632446,
-0.013868932612240314,
0.05468933284282684,
-0.09058850258588791,
0.03116864152252674,
-0.04... | revenues and expenses (Figure 5.5). The balance in Income Summary is the same figure as what is reported on
Printing Plus’s Income Statement.
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Completing the Accounting Cycle
293
Figure 5.5
Income Statement for Printing Plus.... | {"batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "creator": "DocBook XSL Stylesheets V1.79.1", "total_pages": 1055, "file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".... |
eb6b4734-9c8d-4f15-a96e-ba619720d287 | [
-0.024431534111499786,
0.033640142530202866,
-0.00549537967890501,
-0.037825025618076324,
0.011595483869314194,
0.05855737254023552,
0.03494101017713547,
0.04997694492340088,
0.04666857421398163,
-0.012170981615781784,
0.042794644832611084,
-0.03517136350274086,
-0.03344317898154259,
-0.06... | the Income Summary account, there are guidelines to consider.
•
•
If the balance in Income Summary before closing is a credit balance, you will debit Income Summary and
credit Retained Earnings in the closing entry. This situation occurs when a company has a net income.
If the balance in Income Summary before clos... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_size_mb": 156.7, "total_pages": 1055, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "upload_timestamp": "2026-02-07T07:23:08.167... |
d61a475c-404c-4dca-9a36-82b260ea9373 | [
-0.01568610966205597,
0.04981349781155586,
0.012163379229605198,
-0.0010195604991167784,
0.027536960318684578,
0.016622260212898254,
0.051134899258613586,
-0.015921706333756447,
0.11850114166736603,
0.01985149458050728,
0.09300108999013901,
-0.037424273788928986,
-0.02580944448709488,
-0.0... | Summary and credit Retained Earnings.
The T-accounts after this closing entry would look like the following.
Notice that the Income Summary account is now zero and is ready for use in the next period. The Retained
Earnings account balance is currently a credit of $4,665.
294
Chapter 5 Completing the Accounting Cyc... | {"total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "upload_timestamp": "2026-02-07T07:23:08.167529", "... |
d239f4c0-1fcd-435c-9f5f-977dc731c4e5 | [
-0.031526051461696625,
0.05315606668591499,
0.014737102203071117,
-0.02289436012506485,
0.04646354541182518,
0.03576606139540672,
0.05573808029294014,
0.02805083431303501,
0.06039348244667053,
0.03044082224369049,
0.05772344022989273,
-0.031494028866291046,
-0.036292996257543564,
-0.079945... | balance in the Dividends account, the entry will show a credit to Dividends and a debit to Retained Earnings. As
you will learn in Corporation Accounting, there are three components to the declaration and payment of
dividends. The first part is the date of declaration, which creates the obligation or liability to pay... | {"creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "producer": "Prince 11 (www.princexml.com)", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", "file_size... |
490b203c-3693-4277-849f-30694fc09e61 | [
0.008168148808181286,
0.075050950050354,
0.014496134594082832,
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0.03802815079689026,
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0.0261683389544487,
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-0.0017045092536136508,
0.055379725992679596,
-0.02543538250029087,
-0.026444971561431885,
-0.0671584... | account. Only income statement accounts help us summarize income, so only income statement accounts
should go into income summary.
Remember, dividends are a contra stockholders’ equity account. It is contra to retained earnings. If we pay out
dividends, it means retained earnings decreases. Retained earnings decreas... | {"file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "moddate": "2020-08-05T15:26... |
81129d92-9677-4dd4-9daa-fe610076e0f1 | [
0.016106603667140007,
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0.02667704038321972,
0.08352291584014893,
-0.015340521931648254,
-0.01349717378616333,
-0.048514... | earnings, the figures must match. It is important to understand retained earnings is not closed out, it is only
updated. Retained Earnings is the only account that appears in the closing entries that does not close. You
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Complet... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "total_pages": 1055, "uploaded_via": "batch_uploader", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-04-24T10:32:54-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "file_hash": "8973... |
6c687220-7144-440f-8f49-17168ba44b6a | [
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0.03803952783346176,
0.014222915284335613,
-0.03683462366461754,
-0.0024083727039396763,
-... | Chapter 5 Completing the Accounting Cycle
Figure 5.7
T-Account Summary. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0
license)
Notice that revenues, expenses, dividends, and income summary all have zero balances. Retained earnings
maintains a $4,565 credit balance. The post-closing T-acc... | {"creator": "DocBook XSL Stylesheets V1.79.1", "file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "source": "downloads\\business\\accou... |
69b86943-2309-4680-a931-755a74bad2f2 | [
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0.01745963655412197,
-0.01610800065100193,
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-0.012900310568511486,
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-0.07320675253868103,
0.025510266423225403,
0.04219382628798485,
0.05643216148018837,
0.010057798586785793,
-0.056211184710264206,
-0.05790403485298157,
-0.1085... | Prepare the closing entries for Frasker Corp. using the adjusted trial balance provided.
Solution
298
Chapter 5 Completing the Accounting Cycle
5.2 Prepare a Post-Closing Trial Balance
The ninth, and typically final, step of the process is to prepare a post-closing trial balance. The word “post” in
this instance ... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "total_pages": 1055, "source_file": "downloads... |
36fd6cce-ce96-4def-b4e0-b7926a931c3e | [
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-0.021324846893548965,
0.001816852600313723,
-0.012810872867703438,
0.02917024865746498,
-0.0013363913167268038,
0.08048322796821594,
0.08544637262821198,
-0.023205194622278214,
-0.013928413391113281,
... | was an error in the closing process. This error must be fixed before starting the new period.
The process of preparing the post-closing trial balance is the same as you have done when preparing the
unadjusted trial balance and adjusted trial balance. Only permanent account balances should appear on the
post-closing ... | {"moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.7, "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source_file": "downloads\\... |
fbba77f7-1e7c-4771-a8a4-665fb7be3483 | [
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0.03163253888487816,
-0.008758164010941982,
0.00792618002742529,
0.0170406773686409,
0.03774452582001686,
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-0.014151598326861858,
0.06503389030694962,
0.045706506818532944,
0.0993536189198494,
0.030554555356502533,
-0.026479436084628105,
-0.121... | 299
Figure 5.8
Printing Plus’s Post-Closing Trial Balance. (attribution: Copyright Rice University, OpenStax, under
CC BY-NC-SA 4.0 license)
Notice that only permanent accounts are included. All temporary accounts with zero balances were left out of
this statement. Unlike previous trial balances, the retained earn... | {"producer": "Prince 11 (www.princexml.com)", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title":... |
039a2b23-2699-4f91-b93f-c75c8f4ebf2b | [
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0.06060945242643356,
0.046473078429698944,
0.0038606661837548018,
-0.05718514695763588,
0.05825698748230934,
0.011314122937619686,
-0.010901737958192825,
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0.08549787104129791,
-0.02946392074227333,
0.028363440185785294,
0.004338901489973068,
-0.... | reversing entries. Reversing entries reverse an adjusting entry made in a prior period at the start of a new
period. We do not cover reversing entries in this chapter, but you might approach the subject in future
accounting courses.
Now that we have completed the accounting cycle, let’s take a look at another way th... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com)", "batch_upload": true, "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "file_name": "FinancialAccounting-OP.pdf", ... |
a0eefb89-0dc5-4c60-b788-c2f7f248ced4 | [
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0.03713593631982803,
0.012143818661570549,
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0.010284969583153725,
0.0012689547147601843,
0.017094464972615242,
-0.00282291485927999,
-0.... | introduced in the early part of this course.
300
Chapter 5 Completing the Accounting Cycle
C O N C E P T S I N P R A C T I C E
The Importance of Understanding How to Complete the Accounting Cycle
Many students who enroll in an introductory accounting course do not plan to become accountants.
They will work in... | {"uploaded_via": "batch_uploader", "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "producer": "Prince 11 (www.princexml.com)", "creationdate": "2019-04-24... |
b566962e-a008-4fc1-a794-ac058708d237 | [
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0.04061417654156685,
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-0.04332668334245682,
-0.04042404517531395,
0.0071551743894815445,
-0.07310862094163895,
-0.08... | position, if you work in business you need to be able to read financial statements, interpret them, and
know how to use that information to better your business. If you have never followed the full process
from beginning to end, you will never understand how one of your decisions can impact the final
numbers that ap... | {"moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_type": ".pdf", "source": "downloads\\b... |
f4449b50-fd30-4959-b66f-d61b79964972 | [
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-0.021525373682379723,
-0.00796497706323862,
-0.0515250600874424,
-0.02982247993350029,
-0.09052... | financial statements to evaluate your performance. If you evaluate your numbers as often as monthly,
you will be able to identify your strengths and weaknesses before any outsiders see them and make any
necessary changes to your plan in the following month.
5.3 Apply the Results from the Adjusted Trial Balance to Co... | {"source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "title": "Principles of Accounting, Volume 1: Financial Accounting", "uploaded_via": "batch_uploader", "file_name": "FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "batch_upload": true, "file... |
46f4fd7a-a643-4759-89a7-fb72d2835c37 | [
-0.027687689289450645,
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0.0240334440022707,
0.043591734021902084,
-0.03431428596377373,
-0.06401187181472778,
0.01... | company may choose accrual-basis accounting as opposed to cash-basis accounting.
L I N K T O L E A R N I N G
Go to the Internal Revenue Service’s website, and look at the most recently updated Pub 334 Tax Guide
for Small Business (https://openstax.org/l/50IRSPub334) to learn more about the rules for income tax
... | {"producer": "Prince 11 (www.princexml.com)", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_type": ".pdf", "uploaded_via": "batch_uploader", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accountin... |
d569df31-6944-4149-b877-392605ced4a8 | [
-0.04374187812209129,
-0.03725380077958107,
-0.011684564873576164,
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-0.0022461088374257088,
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-0.009331796318292618,
0.04936644062399864,
-0.03074583224952221,
-0.05456554889678955,
0... | analyze a company’s progress, and management can use that information to improve their business. Accrual
accounting is also used to assist companies in securing financing, because banks will typically require a
company to provide accrual-basis financial income statements. The Internal Revenue Service might also
requ... | {"batch_upload": true, "uploaded_via": "batch_uploader", "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02... |
2748f78c-bb4c-47e9-b0b6-08ffdf580784 | [
-0.03378409147262573,
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0.07303030788898468,
0.051377080380916595,
-0.07004169374704361,
0.036743778735399246,
-0.0019... | agreements per a bank loan. Cash-basis accounting is a simpler accounting system to use than an accrual-
basis accounting system when tracking real-time revenues and expenses.
Let’s take a look at one example illustrating why accrual-basis accounting might be preferred to cash-basis
accounting.
In the current year,... | {"total_pages": 1055, "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "batch_upload": true, "uploaded_via": "batch_uploader", "file_name": "FinancialAccounting-OP.pdf", "creationdate": "2019-04-24T10:32:54-05:00", "mod... |
35ac9068-121c-471a-b8aa-693b3c92a82e | [
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0.05977773293852806,
0.012538095936179161,
-0.01266771461814642,
-0.013900776393711567,
-0.0... | Feb. 20
Performed services worth $2,400; customer asked to be billed
Feb. 28
Electricity used during February is estimated at $150
Mar. 2
Paid March rent, $1,000
Mar. 10
Received all money owed from services performed in January and February
Mar. 14
Performed services worth $2,450. Received $1,800 cash
Mar. 3... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "moddate": "2020-08-05T15:26:11-05:00", "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.p... |
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0.026158735156059265,
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0.... | are not the same. These differences can be seen most easily in the ratios formulated from the financial
statement information and used to assess various financial qualities of a company.
You have learned about the current ratio, which is used to assess a company’s ability to pay debts as they
come due. How could the... | {"moddate": "2020-08-05T15:26:11-05:00", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_type": ".pdf", "file_name": "FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accou... |
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-... | last-in, first-out (LIFO); and weighted average. IFRS only allows for FIFO and weighted average. If the
prices of inventory being purchased are rising, the FIFO method will result in a higher value of ending
inventory on the Balance Sheet than would the LIFO method.
Think about this in the context of the current rat... | {"producer": "Prince 11 (www.princexml.com)", "file_name": "FinancialAccounting-OP.pdf", "batch_upload": true, "upload_timestamp": "2026-02-07T07:23:08.167529", "file_type": ".pdf", "moddate": "2020-08-05T15:26:11-05:00", "total_pages": 1055, "creator": "DocBook XSL Stylesheets V1.79.1", "source": "downloads\\business\... |
1b4468ee-3cdd-47e5-a4a6-6dded0f0e674 | [
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-0... | company’s financial statements and related ratios. Different standards produce different results.
Throughout the remainder of this course, you will learn more details about the similarities and
differences between US GAAP and IFRS, and how these differences impact financial reporting.
Remember, in a cash-basis syste... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "source": "downloads\\business\\a... |
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-0.0299... | received in March, the cash-basis system would record revenue in March.
In accrual accounting, we record the revenue as it is earned. There was $2,500 worth of service performed in
January, so that will show as revenue in January. The $2,400 earned in February is recorded in February, and
the $2,450 earned in March ... | {"producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "file_size_mb": 156.7, "total_pages": 1055, "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\Fin... |
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-0.0... | used to earn revenue in December, the company will record it as an expense in January. Electricity used in
This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Completing the Accounting Cycle
303
January, February, and March to help earn revenue in those months will show no expe... | {"file_size_mb": 156.7, "creationdate": "2019-04-24T10:32:54-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "total_pages": 1055, "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.... |
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0.012584383599460125,
0.06046... | same is true for rent expense. Insurance expense is spread out over 12 months, and each month 1/12 of the
total insurance cost is expensed. The comparison of cash-basis and accrual-basis income statements is
presented in Figure 5.9.
Figure 5.9
Cash Basis versus Accrual Basis Accounting. (attribution: Copyright Rice... | {"file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "creator": "DocBook XSL Stylesheets V1.79.1", "producer": "Prince 11 (www.princexml.com)", "file_type": ".pdf", "batch_upload": true, "source":... |
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-0.04... | your ability to pay the debts that you owe in the near future. Solvency will show if you can pay your bills
not only in the short term but also in the long term. Profitability ratios are calculated to see how much
profit is being generated from a company’s sales. Efficiency ratios will be calculated to see how effici... | {"file_size_mb": 156.7, "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": "DocBook XSL Stylesheets V1.79.1", "batch_upload": true, "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_name": "FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial A... |
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... | what really happened over the three months. Revenues and expenses stayed relatively even across periods.
This comparison can show the dangers of reporting in a cash-basis system. In a cash-basis system, the timing
of cash flows can make the business look very profitable one month and not profitable the next. If your
... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "creationdate": "2019-04-24T10:32:54-05:00", "batch_upload": true, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "moddate": "2020-08-05T15:26:11-05:00", "file_size_mb": 156.... |
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-0.030928023... | to more transparency and detail in reporting. This detail is carried over into what is known as a classified
balance sheet.
The Classified Balance Sheet
A classified balance sheet presents information on your balance sheet in a more informative structure, where
asset and liability categories are divided into smalle... | {"file_type": ".pdf", "total_pages": 1055, "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "file_size_mb": 156.7, "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "upload_timestamp": "2026-02-07T07:23:08.167529", "uploaded_via": "batch_uploader", "file_name": "Fi... |
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-... | operating cycle, whichever is longer. An operating cycle is the amount of time it takes a company to use its
cash to provide a product or service and collect payment from the customer (Figure 5.10). For a merchandising
firm that sells inventory, an operating cycle is the time it takes for the firm to use its cash to ... | {"creationdate": "2019-04-24T10:32:54-05:00", "moddate": "2020-08-05T15:26:11-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_size_mb": 156.7, "batch_upload": true, "file_name": "FinancialAccounting-OP.pdf", "uploaded_via": "batch_uploader", "producer": "Prince 11 (www.princexml.com)"... |
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0.04360933229327202,
0.08914491534233093,
0.016... | This OpenStax book is available for free at http://cnx.org/content/col25448/1.4
Chapter 5 Completing the Accounting Cycle
305
information provided by the company, the company has designed and built 30 aircraft carriers in the past
75 years. That is 30 carriers in 75 years. Newport News constructed the USS Gerald R.... | {"uploaded_via": "batch_uploader", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 10... |
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0.043233733624219894,
0.04852711781859398,
0.01889529637992382,
0.018493659794330597,
0.0237... | when dividing current and long-term assets and liabilities.
Learn more about Newport News and its parent company Huntington Ingalls Industries
(https://openstax.org/l/50IngallsShip) and see a time-lapse video of the construction of the carrier
(https://openstax.org/l/50ShipBuilding) . You can easily tell the passage... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": true, "title": "Principles of Accounting, Volume 1: Financial Accounting", "creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "file_size_mb": 156.7, "upload_timestamp": "2026-02-07T07:23:08.167529", "creator": ... |
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-... | or other types of investments that management intends to hold for more than one operating cycle or one
year, whichever is longer. Intangible assets do not have a physical presence but give the company a long-
term future benefit. Some examples include patents, copyrights, and trademarks.
Liabilities are classified a... | {"batch_upload": true, "upload_timestamp": "2026-02-07T07:23:08.167529", "file_size_mb": 156.7, "creator": "DocBook XSL Stylesheets V1.79.1", "uploaded_via": "batch_uploader", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "moddate": "2020-08-05T15:26:11-05:00", "creationdate": "2019-0... |
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306
Chapter 5 Completing the Accounting Cycle
Figure 5.11
Asset Classification Flowchart. A flowchart for asset classification can assist with financial
reporting. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Y O U R T U R N
How to Classi... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "creator": "DocBook XSL Stylesheets V1.79.1", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "total_pages": 1055, "batch_upload": true, "file_size_mb": 156.7, "file_name": "FinancialAccounting-OP.pdf", "source": "dow... |
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-0.... | I. accounts receivable
J.
investment in stock that will be held for six months
Solution
A. property, plant, and equipment. B. intangible asset. C. current asset. D. property, plant, and
equipment. E. long-term investment. F. intangible asset. G. long-term investment. H. current asset. I.
current asset. J. current... | {"uploaded_via": "batch_uploader", "batch_upload": true, "upload_timestamp": "2026-02-07T07:23:08.167529", "producer": "Prince 11 (www.princexml.com)", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "source": "downloads\\business\\accounting\\Financ... |
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-0.0805... | The investment in stock that we only plan to hold for six months will be called a marketable security in
the current asset section of the balance sheet.
As an example, the balance sheet in Figure 5.12 is classified.
308
Chapter 5 Completing the Accounting Cycle
Figure 5.12
Classified Balance Sheet for Magnificent... | {"creationdate": "2019-04-24T10:32:54-05:00", "upload_timestamp": "2026-02-07T07:23:08.167529", "producer": "Prince 11 (www.princexml.com)", "uploaded_via": "batch_uploader", "total_pages": 1055, "file_type": ".pdf", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_name": "FinancialAccounting-... |
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However, grocery companies use such information to inform other important business decisions.
Consider the last time you walked through the grocery store and purchased your favorite brand but
found another item out of stock. What if the next time you shop, the product you loved... | {"upload_timestamp": "2026-02-07T07:23:08.167529", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "title": "Principles of Accounting, Volume 1: Financial Accounting", "batch_upload": true, "creator": "DocBook XSL Stylesheets V1.79.1", "file_name": "FinancialAccounting-OP.pdf", "creatio... |
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which drives profit on small margins. If a product sells well, the store might stock it all of the time, but if a
product does not sell quickly enough, it could be discontinued.
Using Classified Balance Sheets to Evaluate Liquidity
Categorizing assets and liabilities on a balance sheet helps a company evaluate ... | {"title": "Principles of Accounting, Volume 1: Financial Accounting", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "uploaded_via": "b... |
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means that even with a positive income position, as reflected by its income statement, a company can go
bankrupt due to poor cash flow. It is also important to note that even if a company has a lot of cash, it ma... | {"source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "uploaded_via": "batch_uploader", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "file_size_mb": 156.7, "file_type": ".pdf", "producer... |
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-0.032... | up short on cash every year if it is going to remain liquid. A seasonal business, such as a specialized holiday
retailer, may require a short-term loan to continue its operations during slower revenue-generating periods.
Companies will use numbers from their classified balance sheet to test for liquidity. They want t... | {"creationdate": "2019-04-24T10:32:54-05:00", "total_pages": 1055, "producer": "Prince 11 (www.princexml.com)", "upload_timestamp": "2026-02-07T07:23:08.167529", "source_file": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "moddate": "2020-08-05T15:26:11-05:00", "file_type": ".pdf", "source": "download... |
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-... | liabilities, go bankrupt? That question still confuses many, but it comes down to the fact that having
assets recorded on the books at their purchase price is not the same as the immediate value of the
assets. Lehman Brothers had a liquidity crisis that led to a solvency crisis, because Lehman Brothers
could not sel... | {"uploaded_via": "batch_uploader", "creationdate": "2019-04-24T10:32:54-05:00", "title": "Principles of Accounting, Volume 1: Financial Accounting", "file_hash": "89738e550d63820fbb3a833d14ab04029664bcb14dc631bb8a45f0af74d2d6b9", "source": "downloads\\business\\accounting\\FinancialAccounting-OP.pdf", "batch_upload": t... |
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