© 2009 The McGraw-Hill Companies, Inc., All Rights Reserved COMPLETING THE ACCOUNTING CYCLE 会计循环 Chapter 4

McGraw-Hill/Irwin Slide 2 McGraw-Hill/Irwin Slide 2 BENEFITS OF A WORK SHEET 工作表格的益处 Aids the preparation of financial statements. Reduces possibility of errors. Links accounts and their adjustments. Assists in planning and organizing an audit ( 审计）. Helps in preparing interim financial statements. Shows the effects of proposed transactions. Not a required report. P1

McGraw-Hill/Irwin Slide 3 McGraw-Hill/Irwin Slide 3 FastForward Work Sheet For Month Ended December 31, 2009 First, enter the unadjusted amounts to the worksheet. P1

McGraw-Hill/Irwin Slide 4 McGraw-Hill/Irwin Slide 4 Next, enter the adjustments. FastForward Work Sheet For Month Ended December 31, 2009 P1

McGraw-Hill/Irwin Slide 5 McGraw-Hill/Irwin Slide 5 Prepare adjusted trial balance. FastForward Work Sheet For Month Ended December 31, 2009

McGraw-Hill/Irwin Slide 6 McGraw-Hill/Irwin Slide 6 FastForward Work Sheet For Month Ended December 31, 2007 Sort （整理） adjusted trial balance amounts to financial statements. P1

McGraw-Hill/Irwin Slide 7 McGraw-Hill/Irwin Slide 7 FastForward Work Sheet For Month Ended December 31, 2007 Total statement columns, compute income or loss, and balance columns. P1

McGraw-Hill/Irwin Slide 8 McGraw-Hill/Irwin Slide 8  Prepare the Income Statement. P REPARE THE F INANCIAL S TATEMENTS A work sheet does not substitute （代 替） for financial statements. P1

McGraw-Hill/Irwin Slide 9 McGraw-Hill/Irwin Slide 9  Prepare the Statement of Owner’s Equity. P1

McGraw-Hill/Irwin Slide 10 McGraw-Hill/Irwin Slide 10  Prepare the Balance Sheet.

McGraw-Hill/Irwin Slide 11 McGraw-Hill/Irwin Slide 11 CLOSING PROCESS 结帐步骤 Resets revenue, expense and withdrawal account balances to zero at the end of the period. Helps summarize a period’s revenues and expenses in the Income Summary account. Identify accounts for closing. Record and post closing entries. Prepare post-closing trial balance. C1

McGraw-Hill/Irwin Slide 12 McGraw-Hill/Irwin Slide 12 Temporary Accounts Revenues Income Summary Expenses Withdrawals Permanent Accounts Assets Liabilities Owner’s Capital TEMPORARY AND PERMANENT ACCOUNTS 暂时与永久帐户 The closing process applies only to temporary accounts. C1

McGraw-Hill/Irwin Slide 13 McGraw-Hill/Irwin Slide 13 Let’s see how the closing process works! RECORDING CLOSING ENTRIES 记录结 帐分录  Close Revenue accounts to Income Summary.  Close Expense accounts to Income Summary.  Close Income Summary account to Owner’s Capital.  Close Withdrawals to Owner’s Capital. P2

McGraw-Hill/Irwin Slide 14 McGraw-Hill/Irwin Slide 14 adjusted trial balance Using the adjusted trial balance, let’s prepare the closing entries for FastForward. P2

McGraw-Hill/Irwin Slide 15 McGraw-Hill/Irwin Slide 15  Close Revenue accounts to Income Summary. P2

McGraw-Hill/Irwin Slide 16 McGraw-Hill/Irwin Slide 16  C LOSE R EVENUE A CCOUNTS TO I NCOME S UMMARY Now, let’s look at the ledger accounts after posting this closing entry. Dr. Cr. Dec. 31 Consulting revenue 7,850 Rental revenue 300 Income summary 8,150 P2

McGraw-Hill/Irwin Slide 17 McGraw-Hill/Irwin Slide 17  C LOSE R EVENUE A CCOUNTS TO I NCOME S UMMARY P2

McGraw-Hill/Irwin Slide 18 McGraw-Hill/Irwin Slide 18  Close Expense accounts to Income Summary. P2

McGraw-Hill/Irwin Slide 19 McGraw-Hill/Irwin Slide 19 Now, let’s look at the ledger accounts after posting this closing entry.  C LOSE E XPENSE A CCOUNTS TO I NCOME S UMMARY P2

McGraw-Hill/Irwin Slide 20 McGraw-Hill/Irwin Slide 20 Net Income  C LOSE E XPENSE A CCOUNTS TO I NCOME S UMMARY P2

McGraw-Hill/Irwin Slide 21 McGraw-Hill/Irwin Slide 21  Close Income Summary to Owner’s Capital. P2

McGraw-Hill/Irwin Slide 22 McGraw-Hill/Irwin Slide 22 Now, let’s look at the ledger accounts after posting this closing entry.  C LOSE I NCOME S UMMARY TO O WNER ’ S C APITAL P2

McGraw-Hill/Irwin Slide 23 McGraw-Hill/Irwin Slide 23  C LOSE I NCOME S UMMARY TO O WNER ’ S C APITAL P2

McGraw-Hill/Irwin Slide 24 McGraw-Hill/Irwin Slide 24  Close Withdrawals to Owner’s Capital. P2

McGraw-Hill/Irwin Slide 25 McGraw-Hill/Irwin Slide 25 Now, let’s look at the ledger accounts after posting this closing entry.  C LOSE W ITHDRAWALS TO O WNER ’ S C APITAL P2

McGraw-Hill/Irwin Slide 26 McGraw-Hill/Irwin Slide 26  C LOSE W ITHDRAWALS TO O WNER ’ S C APITAL P2

McGraw-Hill/Irwin Slide 27 McGraw-Hill/Irwin Slide 27 Let’s look at FastForward’s post-closing trial balance. POST-CLOSING TRIAL BALANCE 结帐后试算平衡 List of permanent accounts and their balances after posting closing entries. Total debits and credits must be equal. P3

McGraw-Hill/Irwin Slide 28 McGraw-Hill/Irwin Slide 28 P OST -C LOSING T RIAL B ALANCE P3

McGraw-Hill/Irwin Slide 29 McGraw-Hill/Irwin Slide 29 Steps in the Accounting Cycle 会计循环的步骤 C2

McGraw-Hill/Irwin Slide 30 McGraw-Hill/Irwin Slide 30 Current items are those expected to come due (both collected and owed) within the longer of one year or the company’s normal operating cycle （经营周期）. CLASSIFIED BALANCE SHEET 分类的资产负债表 C3

McGraw-Hill/Irwin Slide 31 McGraw-Hill/Irwin Slide 31 Current assets （流动资产） are expected to be sold, collected, or used within one year or the company’s operating cycle. C3

McGraw-Hill/Irwin Slide 32 McGraw-Hill/Irwin Slide 32 Long-term investments （长期投资） are expected to be held for more than one year or the operating cycle. C3

McGraw-Hill/Irwin Slide 33 McGraw-Hill/Irwin Slide 33 Plant assets are tangible long-lived assets used to produce or sell products and services. C3

McGraw-Hill/Irwin Slide 34 McGraw-Hill/Irwin Slide 34 Intangible assets （无形资产） are long-term resources used to produce or sell products and services and that lack physical form. C3

McGraw-Hill/Irwin Slide 35 McGraw-Hill/Irwin Slide 35 Current liabilities （流动负债） are obligations due within the longer of one year or the company’s operating cycle. C3

McGraw-Hill/Irwin Slide 36 McGraw-Hill/Irwin Slide 36 Long-term liabilities （长期负债） are obligations not due within the longer of one year or the company’s operating cycle. C3

McGraw-Hill/Irwin Slide 37 McGraw-Hill/Irwin Slide 37 Equity is the owner’s claim on the assets. C3

McGraw-Hill/Irwin Slide 38 McGraw-Hill/Irwin Slide 38 CURRENT RATIO 流动比率 Helps assess the company’s ability to pay its debts in the near future Current Ratio = Current Assets Current Liabilities $ in millions Current assets $ 2,771 $ 2,784 $ 2,684 $ 4,433 Current liabilities 1,709 1,561 1,451 1,388 Current ratio Industry current ratlo Limited Brands, Inc. A1

McGraw-Hill/Irwin Slide 39 McGraw-Hill/Irwin Slide 39 END OF CHAPTER 4