2. The Accounting Cycle
The accounting cycle helps to keep accounting records in an orderly fashion.
Collect and verify source documents
Analyze each transaction
Journalize each transaction
Posting to the general ledger
Trial balance
Work sheet

3. The Work Sheet
used to collect account information needed to prepare financial statements and complete end-of-period activities
most basic is the six-column format
prepare in pencil (this is a rough draft)

4. Work Sheet Procedures Heading Account Title section
who? what? when?
Account Title section
list all general ledger accounts and account numbers
in numeric order
draw straight line to indicate zero balances
Trial Balance section
take balances from general ledger
rule and total trial balance section
use straight-edge when ruling
double rule if in balance

6. Extending Amounts Balance Sheet section (first)
accounts above Income Summary
100s, 200s, and 300s except Income Summary
Assets, Liabilities and (permanent) Owner’s Equity
Income Statement section
Income Summary and accounts below
400s and 500s and Income Summary
Income Summary, Revenues and Expenses
Temporary Accounts

7. Totaling
rule and total the balance sheet and income statement sections
column totals will not be equal
need to calculate net income or net loss

8. Calculate Net Income / Net Loss
calculate difference between debits and credits
add difference to the smaller amount

9. Record Net Income / Net Loss
credits greater than debits
revenues greater than expenses
write net income in account name column
debits greater than credits
expenses greater than revenues
write net loss in account name column

11. Net Income and Capital
Revenues and expenses are temporary capital accounts
At end-of-period net income is transferred to capital
Add net income to credit column of balance sheet to show what will happen at end-of-period
capital will go up after closing entries
vice versa for net loss

12. Complete the Work Sheet
rule and total each section
single rule means math is performed
debits and credits must equal
double rule sections
double rule means your done