Order of Operations
the income statement is
what is the first statement sheet you complete when doing the books for the year?
we define the cash account as this and why
what is a Permanant account because it is an asset
only these accounts are involved used in adjusting entries
what are expense accounts
the capital account after the income summary is done
what is the owners drawings account
the specific timeframe the income statement covers
what is a reporting period
you do this with the assets
what is listing them by liquidity
we define these as temporary accounts and why
what is because they are only used for one accounting period.
the reason adjusting accounts are used in the accounting cycle
what is to ensure that financial statements reflect a company's financial position
these go on the income summary
what are all revenues and all expenses
the reason larger companies chose to report their financial statements more then annually
what is it provides analysis on a higher level making it easier to identify trends
this statement of owners equity.
what is the second item use in doing the books for the year.
these three types of accounts are temporary
what are revenues, expenses and drawings
2 examples of prepaid expenses in the addjusting entries
what are prepaid rent and prepaid insurance
the reason we use an income summary
what is because it would be to much information for the owners capital account
first step after identifying your reporting period
what is calculate the total revenue your business generated during your reporting period
This process is know as REID
what is the order we close our books at the end of the year
these three types of accounts are permanent
the reason for accumulated depreciation account in adjusting entries
what is to record the total depreciation expense our and assets useful life
the difference between a balance sheet and a classified balance sheet
what is the classified balance sheet has assets and liabilities by liquidity
do you this to calculate your total income
what is calculate total income, subtract operating expenses from gross profit
this is known as the classified balance sheet.
what is the 3rd item we complete when closing our books for the year.
the reason that temporary accounts are temporary
what is because they are used in more than one accounting period
when adjusting entries should be done
what is at the end of the accounting period
the difference between the balance and the post closing trial balance
what is showing the drawings, revenue and expense accounts
this can be sorted out after calculating your Net Income
what is distribution to shareholders, utilizing research and development, or to fuel business expansion.