1. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Module 5 Completing the Accounting Cycle

2. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP The Accounting Cycle Chapter 5 covers the white boxes, closing off the Accounting Cycle.

3. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Creating the Financial Statements The financial reports are created from the trial balance –Essentially it is the same as the Adjusted Trial Balance but there are no Statement of Activities (Income Statement) accounts listed because their contents have been transferred to Accumulated Surplus –To create the Post Closing Trial Balance simply subtract all the expenses from the total income and add the difference to the accumulated surplus account –Therefore, essentially, the Post Closing Trial Balance is very similar to the Statement of Financial Position (Balance Sheet)

4. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Example Adjusted Trial Balance (depreciation and insurance only) DebitCredit Cash10400 Grants Receivable12000 Prepaid Insurance3300 Truck18200 Accounts Payable Wages Payable3500 Accumulated Surplus24600 Income22000 Fuel Expense100 Groceries Expense500 Wages Expense3500 Insurance Expense300 Depreciation Expense1800 Totals50100

5. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Example Surplus calculation Income22000 Fuel Expense100 Groceries Expense500 Wages Expense3500 Insurance Expense300 Depreciation Expense1800 Total Expenses6200 Total Surplus to be added to Accumulated Surplus15800

6. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Example Closing Trial Balance DebitCredit Cash10400 Grants Receivable12000 Prepaid Insurance3300 Truck18200 Accounts Payable Wages Payable3500 Accumulated Surplus40400 Totals43900

7. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Statement of Activities Total Income Expenses Fuel Expense Groceries Expense Wages Expense Insurance Expense Depreciation Total Expenses Surplus/Deficit 22000 100 500 3500 300 1800 6200 15800

8. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Statement of Accumulated Surplus Opening Surplus Balance Add: Initial donation Truck donation Insurance donation March surplus Total additions Accumulated Surplus/Deficit 0 1000 20000 3600 15800 40400

9. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Statement of Financial Position Current Assets Cash10400 Current Liabilities AP0 Grants Receivable12000 Wages Payable3500 Prepaid Insurance3300 Fixed Assets Truck18200Accumulated Surplus40400 Total Assets43900Total Liabilities & Surplus43900

10. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP So now you’ve seen it all…

11. Financial Accounting Dave Ludwick, P.Eng, MBA, PMP Onward… Chapter 6