- For Week 3 we will study the remaining three steps
in the Accounting Cycle: 7. Preparing the Financial statements, 8.
Journalize and Post Closing Entries, 9. Prepare a post-closing trial
balance. How do the different steps affect the financial statements? What
is the effect on the financial statements of missing a step when
completing the accounting cycle?
- Step 7 of the Accounting Cycle is preparing the Financial Statements. There is a specific
order that the Financial Statements need to be prepared. Discuss the specific
order and explain why it is important.
- Step 8 of the Accounting Cycle is to journalize and post
the closing entries. What are the four closing journal entries? In your
opinion, why are these necessary?
- Check out Appendix 4A on page 195-196 of the e-book. In your opinion, what is the main
purpose and benefits of a financial statement worksheet in assisting with the
completion of the accounting cycle? Note that a using a worksheet is optional.
- How would you describe the difference between the operating cycles of a Service Company and that of a Merchandising Company? What accounts would a merchandising company have in its
chart of accounts that would be different from a service-based company?
- What is the difference between a perpetual inventory system and a periodic inventory system? Pick one and discuss the advantages and disadvantages.
- One unique aspect of merchandising financial statements is the Cost of Goods Sold
account. How would you calculate cost of goods sold at the end of an accounting
period under a periodic inventory system? What items make up cost of goods
- What is the difference between a single step income statement and a multiple step income statement?
What are the advantages and disadvantages of each? If you were a business
owner, which type would you prefer to use?
Answers can be up to 70 words each.
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