Question

This week we covered the following objectives:

Prepare adjusting entries and the postclosing trial balance.

Prepare the financial statements.

Share how this week went for you. How was this class as a whole? What were some of the topics you enjoyed the most and what are some of the ones you struggled with?

Answer 1

I could gain an in-debth knowledge on recording adjusting entries, preparing postclosing trial balance and preparing financial statements. This class as a whole this week was also very much informative and participative. I've enjoyed almost all the topics covered in this week except the topic of adjusting entries versus closing entries initially. Later on, could get the clarity between the two effectively and now I am familiar with all the topics covered this week Adjusting entries are those journal entries recorded at the last day of reporting period to effect accruals including revenue and expenditure in order to make sure that all revenues and expenditures related to the reporting period are recognized in the respective reporting period itslef. For example, unearned revenue earned, prepaid insurance expired, rent expense accrued, etc. Closing entries are those journal entries recorded at the last day of reporting period to set temporary account balances to zero to begin the next period and to transfer net income (loss) to the Retained Earnings account. For example, closing revenue & expense accounts to retained earnings using income summary account, closing dividends to retained earnings Financial statements are the out puts in a reporting format but prepared using account balances that are present on the adjusted trial balance. Financial statements include income statement, balance sheet and statement of cash flows. Income statement portrays the operational activities and their results for the reporting period. Balance sheet portrays the financial position of the company at the last day of the reporting period. Statement of cash flows portrays the reasons for movement of cash during the reporting period under three headings namely operating, investing and financing activities. Postclosing trial balance is the next version of adjusted trial balance that consists of account balances that are parmenant in nature as the temporary accounts would have been closed using closing entries already. In other words, postclosing TB is an adjusted trial balance containing only balance sheet related accounts. For example, cash, accounts receivable, fixed assets, accounts payable, long-term debt, common stock, retained earnings, etc.