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IFRS EDITION
Prepared by
Coby Harmon
University
4-1
of California, Santa Barbara
Westmont College
PREVIEW OF CHAPTER 4
Financial Accounting
IFRS 3rd Edition
Weygandt ● Kimmel ● Kieso
4-2
CHAPTER
Completing the
4 Accounting Cycle
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Prepare a worksheet.
2. Explain the process of closing the books.
3. Describe the content and purpose of a post-closing trial balance.
4. State the required steps in the accounting cycle.
5. Explain the approaches to preparing correcting entries.
6. Identify the sections of a classified statement of financial position.
4-3
Using a Worksheet
Learning
Worksheet Objective 1
Prepare a
worksheet.
Multiple-column form used in preparing
financial statements.
4-4 LO 1
Steps in Preparing a Worksheet Illustration 4-1
Form and procedure
for a worksheet
4-5
Steps in Preparing a Worksheet Illustration 4-2
4-6 LO 1
Steps in Preparing a Worksheet
Illustration 3-23
General journal showing
adjusting entries
Adjusting
Journal
Entries
(Chapter 3)
4-7
Steps in Preparing a Worksheet Illustration 4-2
4-12 LO 1
Preparing Statements from a Worksheet
Illustration 4-3
Financial statements from a worksheet
4-13 LO 1
Preparing Statements from a Worksheet
Illustration 4-3
Financial statements from a worksheet
4-14 LO 1
4-15 Illustration 4-3
Financial statements from a worksheet
LO 1
4-16
4-17
Closing the Books
Learning
At the end of the accounting period, the Objective 2
Explain the process of
company makes the accounts ready for the closing the books.
next period.
Illustration 4-4
Temporary versus permanent accounts
4-18 LO 2
Preparing Closing Entries
4-19 LO 2
Illustration 4-5
Diagram of closing
• HELPFUL HINT process—corporation
Owner, Withdrawal
4-20 LO 2
Owner, Capital
Owner, Capital
Owner, Withdrawals
Illustration 4-6
4-21
Closing entries journalized LO 2
Posting
Closing
Owner, Capital
Entries
Owner, Withdrawal
Illustration 4-7
Posting of closing entries
4-22 LO 2
Preparing a Post-Closing Trial Balance
Learning
Post-closing trial balance Objective 3
Describe the content
and purpose of a post-
Lists permanent accounts and their closing trial balance.
4-23 LO 3
Illustration 4-8
Illustration 4-8
4-24 Post-closing trial balance LO 3
Learning Objective 4
The Accounting Cycle State the required steps in the
accounting cycle.
Illustration 4-11
4-25
Steps in the accounting cycle
LO 4
Correcting Entries—An Avoidable Step
Learning
Unnecessary if accounting records are Objective 5
Explain the approaches
free of errors. to preparing correcting
entries.
4-26 LO 5
Correcting Entries—An Avoidable Step
CASE 1: On May 10, Bai Co. journalized and posted a NT$500 cash
collection on account from a customer as a debit to Cash NT$500 and a
credit to Service Revenue NT$500. The company discovered the error
on May 20, when the customer paid the remaining balance in full.
4-27 LO 5
Correcting Entries—An Avoidable Step
4-28 LO 5
> DO IT!
4-29 LO 5
> DO IT!
4-30 LO 5
> DO IT!
4-31 LO 5
> DO IT!
4-32 LO 5
Statement of Financial Position
Learning
Presents a snapshot at a point in time. Objective 6
Identify the sections of
a classified statement
To improve understanding, companies of financial position.
Standard Classifications
4-34 LO 6
Illustration 4-17
Classified statement
of financial position
4-35 LO 6
Intangible Assets
Illustration 4-18
Intangible assets section
4-36 LO 6
Property, Plant, and Equipment
4-37 LO 6
Property, Plant, and Equipment
Illustration 4-19
Property, plant, and equipment section
4-38 LO 6
Long-Term Investments
Illustration 4-20
Long-term investments section
4-39 LO 6
Current Assets
4-40 LO 6
Current Assets
Illustration 4-21
Current assets section Accounts usually listed in the reverse order they
expect to convert them into cash.
4-41 LO 6
Equity
Illustration 4-22
4-42 Equity section LO 6
Non-Current Liabilities
Illustration 4-23
Non-current liabilities section
4-43 LO 6
Current Liabilities
4-44 LO 6
Current Liabilities
Illustration 4-24
Current liabilities section
4-45 LO 6
Reversing Entries Example
4-46 LO 7
Reversing Entries Example
With Reversing Entries
(per appendix)
Adjusting Entry
Oct. 31 Same entry
Closing Entry
Oct. 31 Same entry
Reversing Entry
Nov. 1 Salaries and Wages Payable 1,200
Salaries and Wages Expense 1,200
Illustration 4A-1
Comparative entries—not reversing vs. reversing
4-47 LO 7
Reversing Entries Example
Illustration 4A-2
Postings with
reversing
entries
4-48 LO 7
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4-49