Chapter 4: Completing the Accounting Cycle

Part 1

The end of period spreadsheet is useful in preparing an Adjusted Trial Balance from which the three Financial Statements can be prepared. Please indicate the results in the adjusted Trial Balance under the following circumstances. Please provide an example.

a. An account has a debit balance. The adjustment requires a credit to that account. The debit amount is higher than the credit amount. Is the result in the Adjusted Trial Balance a debit or credit? Please provide an example.

b. An account has a debit balance. The adjustment requires a credit to that account. The debit amount is higher than the credit amount. Is the result in the Adjusted Trial Balance a debit or credit? Please provide an example.

c. An account has a credit balance. The adjustment requires a credit to that account. Is the result in the Adjusted Trial Balance a debit or credit? Please provide an example.

Part 2

Please tell us about permanent and temporary accounts. Please let us know which financial statement contains the permanent accounts and which one contains the temporary accounts. Please explain the two closing entries and provide an example.