Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

Which of the following lists the correct order of steps in processing transactions, including adjusting journal entries for prepaid expenses?

Prepare trial balance, analyze transactions, journalize, post to ledger, adjust entries, prepare financial statements

Adjust entries, analyze transactions, journalize, post to ledger, prepare trial balance, prepare financial statements

Journalize, analyze transactions, post to ledger, adjust entries, prepare trial balance, prepare financial statements

Analyze transactions, journalize, post to ledger, prepare trial balance, adjust entries, prepare financial statements

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Verified step by step guidance

Step 1: Understand the accounting cycle, which is the process of recording and processing all financial transactions of a company. This cycle includes analyzing transactions, journalizing, posting to the ledger, preparing a trial balance, adjusting entries, and preparing financial statements.

Step 2: Begin with analyzing transactions. This involves reviewing source documents (e.g., invoices, receipts) to determine the nature of the transaction and its impact on the accounting equation (Assets = Liabilities + Equity).

Step 3: Journalize the transactions. Record each transaction in the journal as a debit and a credit, ensuring that the accounting equation remains balanced. Use the double-entry accounting system.

Step 4: Post the journal entries to the ledger. Transfer the information from the journal to the general ledger, where each account's activity is summarized.

Step 5: Prepare a trial balance to ensure that the total debits equal the total credits. After this, adjust entries for items like prepaid expenses, accrued revenues, and depreciation. Finally, prepare the financial statements (income statement, balance sheet, and cash flow statement) based on the adjusted trial balance.