Chapter 13 - Financial statements and closing procedures. After reading this chapter, you should be able to: Prepare a classified income statement from the worksheet, prepare a statement of owner's equity from the worksheet, prepare a classified balance sheet from the worksheet, journalize and post the adjusting entries, journalize and post the closing entries, prepare a postclosing trial balance, journalize and post reversing entries, define the accounting terms new to this chapter. | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Statements and Closing Procedures Section 1: Preparing the Financial Statements Chapter 13 Section Objectives Prepare a classified income statement from the worksheet. Prepare a statement of owner’s equity from the worksheet. Prepare a classified balance sheet from the worksheet. A classified income statement is sometimes called a multiple-step income statement. The Classified Income Statement Objective 1 Prepare a classified income statement from the worksheet At the end of the period, the three financial statements must be prepared. A newspaper’s classified section is similar to a business’s classified financial statements. Classifying like information together on financial statements makes them easier to interpret. A classified financial statement is a format in which items are divided into groups of similar accounts and a subtotal is given for each group. The . | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Statements and Closing Procedures Section 1: Preparing the Financial Statements Chapter 13 Section Objectives Prepare a classified income statement from the worksheet. Prepare a statement of owner’s equity from the worksheet. Prepare a classified balance sheet from the worksheet. A classified income statement is sometimes called a multiple-step income statement. The Classified Income Statement Objective 1 Prepare a classified income statement from the worksheet At the end of the period, the three financial statements must be prepared. A newspaper’s classified section is similar to a business’s classified financial statements. Classifying like information together on financial statements makes them easier to interpret. A classified financial statement is a format in which items are divided into groups of similar accounts and a subtotal is given for each group. The Classification and order of information depends on the type of business and the expected use of the statement. We can use a worksheet to prepare a classified income statement. A classified income statement is sometimes called a multiple-step income statement. This type of income statement contains several subtotals which are computed before the net income is calculated. A single-step income statement is a format in which only one computation is needed to determine the net income. ANSWER: QUESTION: What is a single-step income statement? (Total Revenue – Total Expenses = Net Income) Three elements are needed to compute the cost of goods sold: The Cost of Goods Sold section contains information about the cost of the merchandise that was sold during the period. Cost of Goods Sold Beginning inventory Net delivered cost of purchases Ending inventory Purchases Freight In (Purchases Returns and Allowances) (Purchases Discounts) Net Delivered Cost of Purchases Net Delivered Cost of Purchases Cost of Goods
