7/22/2021 1 Chapter 4 Completing The Accounting Cycle Asso. Prof. Tran Phuoc Objectives After studying this chapter, you should be able to: [1] Prepare a worksheet. [2] Explain the process of closing the books. [3] Describe the content and purpose of a postclosing trial balance. [4] State the required steps in the accounting cycle. [5] Explain the approaches to preparing correcting entries. [6] Identify the sections of a classified balance sheet. 7/22/2021 2 Using a Worksheet Objective 4.1 - Prepare a worksheet 1. Steps in preparation 2. Preparing financial statements 3. Preparing adjusting entries Worksheet A worksheet is a multiple￾column form used in the adjustment process and in preparing financial statements 7/22/2021 3 Steps in preparation STEP 1. PREPARE A TRIAL BALANCE ON THE WORKSHEET. STEP 2. ENTER THE ADJUSTMENTS IN THE ADJUSTMENTS COLUMNS STEP 3. ENTER ADJUSTED BALANCES IN THE ADJUSTED TRIAL BALANCE COLUMNS STEP 4. EXTEND ADJUSTED TRIAL BALANCE AMOUNTS TO APPROPRIATE FINANCIAL STATEMENT COLUMNS STEP 5. TOTAL THE STATEMENT COLUMNS, COMPUTE THE NET INCOME (OR NET LOSS), AND COMPLETE THE WORKSHEET Objective 4.1 - Prepare a worksheet Illustration 4-2, 4-3 A, B, C page 156 Preparing Financial Statements from a Worksheet The income statement is prepared from the income statement columns. The balance sheet and owner’s equity statement are prepared from the balance sheet columns.