CHAPTER 1

Review of the
accounting process
OBJECTIVES
1. Identify and explain the steps in the
accounting process.
2. Prepare adjusting entries and understand the
rationale for their preparation.
 Accounting Cycle
1. Identify business transactions/Documentation
2. Journalizing
3. Posting
4. Unadjusted Trial Balance
5. Adjustments
6. Worksheets
7. Financial Statements
8. Journalize and Post Adjusting and Closing Entries
9. Post-Closing Trial Balance
10. Reversing Entries
Accounting Cycle

Recording and Classifying Steps 1 to 4

Phase

Reporting Phase Steps 5 to 7

Summarizing or Closing Steps 8 to 10

Phase
Adjustments

1) ACCRUED EXPENSES

Expenses xxx

Payable xxx
Adjustments

2) ACCRUED REVENUES

Receivable xxx

Revenue xxx
Adjustments

3) PREPAID EXPENSES
Asset
Metho
Expense xx Expired Portion
d x
Prepaid Expense xx
Expense
Method Prepaid Expense xx x Unexpired Portion
x
Expense xx
x
Adjustments

4) UNEARNED REVENUE
Liabilit
y
Unearned Revenue xx
Metho x Earned Portion
d
Revenue xx
Revenue
Method Revenue xx x
x Unearned Portion

Unearned Revenue xx
x
Adjustments

5) DEPRECIATION

Depreciation Expense xxx

Accumulated xxx
Depreciation
Adjustments

6) UNCOLLECTIBLE ACCOUNTS / BAD DEBTS /

DOUBTFUL ACCOUNTS

Uncollectible Accounts Expense xxx

Allowance for Uncollectible Accounts xxx