IFRS - Preparation Course

Accounting Cycle
(INDEX)

Topic
A. Accounting Information System
B. Accounting Cycle

A. Accounting Information System:

INDEX
1. Debits and credits
2. Accounting equation

1. Debits and credits:

 An Account shows the effect of transactions on a given asset, liability,

equity, revenue, or expense account.

 Double-entry accounting system (two-sided effect).

 Recording done by debiting at least one account and crediting another.

 DEBITS must equal CREDITS.

Prepared by: Dr. Mohd Eissa Page 1

Prepared by: Dr. Mohd Eissa Page 2
2. Accounting equation

Prepared by: Dr. Mohd Eissa Page 3

Examples

Prepared by: Dr. Mohd Eissa Page 4

B. Accounting Cycle:

Prepared by: Dr. Mohd Eissa Page 5

Prepared by: Dr. Mohd Eissa Page 6
4- Adjusting Entries

 Revenues – Recognized and recorded in the period in which they are

earned.

 Expenses - recognized and recorded in the period in which they are

incurred.

 Adjusting entries - needed to ensure that the revenue recognition and

matching principles are followed.

Prepared by: Dr. Mohd Eissa Page 7

Prepared by: Dr. Mohd Eissa Page 8
Prepared by: Dr. Mohd Eissa Page 9
Prepared by: Dr. Mohd Eissa Page 10
Prepared by: Dr. Mohd Eissa Page 11
Prepared by: Dr. Mohd Eissa Page 12
Prepared by: Dr. Mohd Eissa Page 13
Prepared by: Dr. Mohd Eissa Page 14
Prepared by: Dr. Mohd Eissa Page 15
Prepared by: Dr. Mohd Eissa Page 16
Prepared by: Dr. Mohd Eissa Page 17
The Answer:

Prepared by: Dr. Mohd Eissa Page 18

 8. Post-Closing Trial Balanc
Example continued:
Acct. No. Account Debit Credit
100 Cash $ 140,000
105 Accounts receivable 35,000
130 Building 190,000
220 Note payable $ 150,000
300 Common stock 100,000
330 Retained earnings 115,000
380 Dividends declared -
400 Sales -
430 Interest income -
500 Cost of goods sold -
520 Salary expense - Beg + RE
RE-
550 Depreciation expense
Movement
-
= (38.000 +
77.000)
$ 365,000 $ 365,000

77

Prepared by: Dr. Mohd Eissa Page 19