MUHASEBE I

Classified balance sheet reports each asset, liability and owner’s equity in specific sections. There are five sections in the classified balance sheet

Liabilities are the existing debts of the company. Non-current liabilities are the liabilities that their maturity dates are over one year or the operating cycle. Companies use their non-current liabilities for financing non-current assets as well as current assets. Financing current assets with non-current liabilities creates an advantage for the company rather than using current liabilities. Company can use the assets financed by non-current liabilities and earn more profit till the maturity date rather than using current liability

Current assets include the assets that will be converted into cash, sold, consumed or received Statement of owner’s equity reports the changes in the capital throughout the period caused by the owner’s capital investments or withdrawals, net profit or loss. Balance sheet reports the assets, liabilities and the owner’s equity in a specific date. Revenues and expenses are reported in the income statement; assets, liabilities and owner’s equity are reported in the balance sheet. This company has raw material to be consumed within 10 months.

If the revenue exceeds expenses , then profit occurs. In this example, the revenue exceeds the expense by 10.000 liras, which means that the company has a profit of 10,000 liras. If expenses exceed revenues, then loss occurs. The balance of the Income Summary account, the 10,000 lira profit- is transferred to Capital account.

Advertisement Expense, Supply Expense, Depreciation Expense and Salaries-Wages Expense are credited with the same amount of their debit balances, and Income Summary account is debited. The total in this case is: 7,538,25.

Advertisement Expense, Supply Expense, Depreciation Expense and Salaries-Wages Expense are credited with the same amount of their debit balances, and Income Summary account is debited. After the journal entry, the accounts will show up like:

The steps in accounting cycles briefly are:
• Opening entries based on opening balance sheet
• Posting opening entries to ledger accounts
• Analyzing and journalizing daily transactions
• Posting daily transactions to accounts
• Preparing monthly trial balances
• Preparing unadjusted trial balance at the end of the period
• Adjusting entries
• Preparing adjusted trial balance
• Preparing financial statements
• Closing entries
• Preparing post-closing trial balance

The steps in accounting cycles briefly are:
• Opening entries based on opening balance sheet
• Posting opening entries to ledger accounts
• Analyzing and journalizing daily transactions
• Posting daily transactions to accounts
• Preparing monthly trial balances
• Preparing unadjusted trial balance at the end of the period
• Adjusting entries
• Preparing adjusted trial balance
• Preparing financial statements
• Closing entries
• Preparing post-closing trial balance

Current liabilities are the liabilities that the company has to pay either with cash of by handling goods or services within one year or in an operating cycle.

As the revenue accounts, expense accounts and Income Summary accounts were closed, it means that they have no balances. So, in the post-closing trial balance those type of accounts will not take place. Assets, liabilities and Capital accounts are the only accounts that have balances left at the end of the period.

Financial statements are prepared in order;
• Income statement
• Statement of owner’s equity
• Balance sheet

Income statement is the financial statement that reports operation results of a business for a specific period of time (month, quarter quarter, or year year).

Statement of owner’s equity reports the changes in the capital throughout the period caused by the owner’s capital investments or withdrawals, net profit or loss.

Balance sheet reports the assets, liabilities and the owner’s equity in a specific date.

Liquidity is the measure of how quickly and easily an account can be converted into cash

Current assets include the assets that will be converted into cash, sold, consumed or received within 12 months or within the business’s operating cycle, and the cash and cash equivalents.

Non-current assets include the assets acquired to be used in business ‘s operations for more than 12 months and receivables of which due dates are more than 12 months

Current liabilities are the liabilities that the company has to pay either with cash of by handling goods or services within one year or in an operating cycle.

Owner’s equity shows the owners’ investments, profit and loss of the period.

The steps in accounting cycles briefly:
• Opening entries based on opening balance sheet
• Posting opening entries to ledger accounts
• Analyzing and journalizing daily transactions
• Posting daily transactions to accounts
• Preparing monthly trial balances
• Preparing unadjusted trial balance at the end of the period
• Adjusting entries
• Preparing adjusted trial balance
• Preparing financial statements
• Closing entries
• Preparing post-closing trial balance