tailieunhanh - Lecture Accounting fundamentas (7e): Chapter 21 - Curran

Chapter 21 - Worksheet adjustments. After completing this chapter, students will be able to: Explain the need for worksheet adjustments, describe how adjustments are calculated and recorded on the worksheet, explain the procedure for writing off an uncollectible account receivable, complete the adjusted trial balance section of the worksheet. | CHAPTER TWENTY ONE WORKSHEET ADJUSTMENTS 1. Explain the need for worksheet adjustments. 2. Describe how adjustments are calculated and recorded on the worksheet. 3. Explain the procedure for writing off an uncollectible account receivable. 4. Complete the Adjusted Trial Balance section of the worksheet. WORKSHEET ADJUSTMENTS Objectives: 21- The Need for Adjustments It is important that the financial statements present a complete picture of the results of operations and the condition of the business. The revenues and expenses for the period must be matched in order to accurately determine the net income or net loss. This is the matching principle of accounting. 21- The Adjustment for Merchandise Inventory When the trial balance is prepared, the General Ledger shows the amount of merchandise inventory that was on hand at the start of the accounting period. Changes occurred during the period because goods were purchased and sold -- those changes need to be recorded. 21- . | CHAPTER TWENTY ONE WORKSHEET ADJUSTMENTS 1. Explain the need for worksheet adjustments. 2. Describe how adjustments are calculated and recorded on the worksheet. 3. Explain the procedure for writing off an uncollectible account receivable. 4. Complete the Adjusted Trial Balance section of the worksheet. WORKSHEET ADJUSTMENTS Objectives: 21- The Need for Adjustments It is important that the financial statements present a complete picture of the results of operations and the condition of the business. The revenues and expenses for the period must be matched in order to accurately determine the net income or net loss. This is the matching principle of accounting. 21- The Adjustment for Merchandise Inventory When the trial balance is prepared, the General Ledger shows the amount of merchandise inventory that was on hand at the start of the accounting period. Changes occurred during the period because goods were purchased and sold -- those changes need to be recorded. 21- The Adjustment for Supplies Used The cost of the inventory of supplies on hand at the end of the month are subtracted from the cost of supplies available during the month. The resulting figure is the cost of supplies used during the month. 21- The Adjustment for Expired Insurance An adjustment must be made to charge the cost of the expired insurance to the operations of the period. 21- The Adjustment for Depreciation The cost of each long-term asset must be charged to operations. The amount that is charged to operations is called depreciation. 21- The Adjustments for Uncollectible Accounts Estimated uncollectible amounts owed by credit customers are referred to as uncollectible accounts, or bad debts. As an expense for the business they must be recorded. 21- Writing Off a Customer’s Account If efforts to collect money owed the business are not successful, the customer’s account is written off by recording the following entry in the general journal. 21- Entry to Record