ACC 221 1st Edition Lecture 9 Outline of Previous Lecture- Chapters 7: Intro to adjusting entries Service company basicso Similar to merchandising accounts, only a few differenceso Supply and depreciation accounts Adjusting journal entrieso Adjusting entrieso Depreciation adjusting entrieso Depreciation errorso Supply adjusting entrieso Supply errorsOutline of Current Lecture - Chapters 5, 6, & 7: Review Adjusting Entries & Accounts Closing revenue and expense accountso Closing accountso Closing processo Other closing informationCurrent Lecture- Chapters 5, 6, & 7: Review Adjusting Entries & Accounts Closing revenue and expense accounts o Closing accounts In closing process, expense and revenue accounts will reset to zero All other accounts, including assets, liabilities, and common stock roll over Closing expense and revenue accounts- Net income - subtract all expense accounts from revenue- Net income + old retained earnings = new retained earnings balance o Closing process During closing process for expense accounts, retained earnings is debited, decreasing retained earnings During closing process for revenue accounts, retained earnings is credited, increasing retained earnings- If sum of revenue is larger than sum of expenses, retained earnings will increaseThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- If sum of expense is larger than sum of revenue, retained earnings will decreaseo Other closing information Post-closing trial balance is the last report prepared in accounting system Adjusting entries are added to journal and ledger prior to preparing any of the balance reports, but after all of the regular entries Asset account balances, liability account balances, and the common stock balance will always be the same on both the pre-closing trial balances and post-closing trial
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