After completing this chapter you should be able to: Prepare a worksheet, explain the process of closing the books, describe the content and purpose of a post-closing trial balance, state the required steps in the accounting cycle,.and other contents. | CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE Accounting Principles, Eighth Edition Prepare a worksheet. Explain the process of closing the books. Describe the content and purpose of a post-closing trial balance. State the required steps in the accounting cycle. Explain the approaches to preparing correcting entries. Identify the sections of a classified balance sheet. Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Using a Worksheet Steps in preparation Preparing financial statements Preparing adjusting entries Closing the Books Summary of Accounting Cycle Classified Balance Sheet Current assets Long-term investments Property, plant, and equipment Intangible assets Current liabilities Long-term liabilities Owner’s equity Reversing entries—An optional step Correcting entries—An avoidable step Completing the Accounting Cycle Preparing closing entries Posting closing entries Preparing a post-closing trial balance Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of | CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE Accounting Principles, Eighth Edition Prepare a worksheet. Explain the process of closing the books. Describe the content and purpose of a post-closing trial balance. State the required steps in the accounting cycle. Explain the approaches to preparing correcting entries. Identify the sections of a classified balance sheet. Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Using a Worksheet Steps in preparation Preparing financial statements Preparing adjusting entries Closing the Books Summary of .
