1. The Accounting Process
Sid Glandon, DBA, CPA
Associate Professor of Accounting

2. Basic Accounting Equation
Assets = Liabilities + Owners’ Equity
Owners’ Equity consists of
Revenues and gains, less
Expenses and losses, plus
Contributions by owners, less
Withdrawals by owners, plus or less
Other comprehensive income

3. Accounting Cycle Identify transactions and/or events
Journalize transactions and/or events
Post transactions and/or events
Prepare unadjusted trial balance
Prepare adjusting journal entries
Prepare adjusted trial balance
Prepare financial statements
Journalize adjusting journal entries
Post adjusting journal entries
Journalize closing journal entries
Post closing journal entries
Prepare a post closing trial balance

4. Permanent Accounts
Assets
Liabilities
Owners’ Equity

5. Temporary Accounts
Revenue
Gains
Expenses
Losses

6. Conversion from Cash to Accrual Basis Accounting

7. Adjusting Journal Entries
Prepayments (deferrals)
Cash received/paid before recognition of the transaction
Accruals
Cash received/paid after recognition of the transaction
Estimates
Bad debt expense
Amortization, depreciation and depletion

8. The Closing Process
Close revenue and gain accounts to the income summary
Close expense and loss accounts to the income summary
Close the income summary to retained earnings
Close dividends declared to retained earnings