1. Completing the Accounting Cycle – Part II Chapter 4 1

2. Objective 1 Describe the accounting cycle. 2

3. The accounting process that begins with analyzing and journalizing transactions and ends with preparing the accounting records for the next period’s transactions is called the accounting cycle. There are ten steps in the accounting cycle. 3

4. 2.Transactions are posted to the ledger. 3.An unadjusted trial balance is prepared. 4.Adjustment data are assembled and analyzed. 5.An optional end-of-period spreadsheet (work sheet) is prepared. 1.Transactions are analyzed and recorded in the journal. (continued) Accounting Cycle 4

5. 7.An adjusted trial balance is prepared. 8.Financial statements are prepared. 9.Closing entries are journalized and posted to the ledger. 10.A post-closing trial balance is prepared. 6.Adjusting entries are journalized and posted to the ledger. Accounting Cycle (continued) 5

6. From the following list of steps in the accounting cycle, identify what two steps are missing. a.Transactions are analyzed and recorded in the journal. b.Transactions are posted to the ledger. c.Adjustment data are assembled and analyzed. d.An optional end-of-period spreadsheet (work sheet) is prepared. e.Adjusting entries are journalized and posted to the ledger. f.Financial statements are prepared. g.Closing entries are journalized and posted to the ledger. h.A post-closing trial balance is prepared. Example Exercise 4-6 Accounting Cycle 6

7. The following two steps are missing: (1) the preparation of an unadjusted trial balance and (2) the preparation of the adjusted trial balance. The unadjusted trial balance should be prepared after step (b). The adjusted trial balance should be prepared after step (e). Example Exercise 4-6 (continued) 7

8. Illustrate the accounting cycle for one period. Objective 2 8

9. Journal entries for April, Kelly Consulting Exhibit 9 9

10. Journal entries for April, Kelly Consulting (continued) Exhibit 9 10

11. Unadjusted Trial Balance, Kelly Consulting Exhibit 10 11

12. 12 End-of-Period Spreadsheet (Work Sheet) Exhibit 11 4-63

13. Adjusting Entries, Kelly Consulting Exhibit 12 13

14. Exhibit 13 14

15. Financial Statements, Kelly ConsultingExhibit 14 15

16. Financial Statements, Kelly Consulting (continued) Exhibit 14 16

17. Financial Statements, Kelly Consulting (continued) Exhibit 14 17

18. Closing Entries, Kelly ConsultingExhibit 15 18

19. Closing Entries, Kelly ConsultingExhibit 15 19

20. Ledger, Kelly Consulting Exhibit 17 20

21. Ledger, Kelly Consulting (continued) Exhibit 17 21

22. Ledger, Kelly Consulting (continued) Exhibit 17 22

23. Ledger, Kelly Consulting (continued) Exhibit 17 23

24. Explain what is meant by the fiscal year and the natural business year. Objective 3 24

25. The annual accounting period adopted by a business is known as its fiscal year. When a business adopts a fiscal year that ends when business activities have reached the lowest point in its annual operation, such a fiscal year is also called the natural year. 25

26. Financial History of a Business 26

27. THE END 27