MUHASEBE I

For the preparation of financial statements, the starting point is the adjusted trial balance.

Therefore, information given in the financial statements must be relevant, faithfully representable, comparable, verifiable, timely and understandable.

For the preparation of financial statements, the starting point is the adjusted trial balance. Adjusted trial balance is one form of trial balance that holds in-term transactions’ totals and balances as well as the end of the period transactions’ totals and balances for final checking of the accounts and preparation of financial statements.

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).

Balance sheet reports the assets, liabilities and the owner’s equity in a specific date. In other words, balance sheet provides information about the financial position of the company. In the trial balance you can easily find out asset, liability and owner’s equity accounts which will form the balance sheet.

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

Salary payable is an example of current liabilities.

In order to close revenue accounts, the revenue account must be debited.

Service Revenue account is debited with the same amount of its credit balance and Income Summary account is credited. By doing so, BB Company closes its revenue account and transfers the balance to Income Summary account.

Classified balance sheet reports each asset, liability and owner’s equity in specific sections.

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).

Current liabilities, non current liabilities, owner's equity

Profit/loss = revenues + expenses. This means 1.000.000 - 450.000 = 550.000

After closing of revenue accounts,expense accounts and Income Summary account, it is timeto prepare post-closing trial balance as the ending step in the accounting cycle.

Accounting cycle can be defined as the process by which companies produce their financial statements for a specific period of time.

Opening entries based on opening balance sheet is the first step of the accounting circle.

Preparing post-closing trial balance is the last step of the accounting cycle.

At the end of each month, monthly trial balance is prepared in order to ensure that the totals and the balances of the accounts are equal.

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. Here are some examples for current assets: cash and cash equivalents, accounts receivables, merchandise inventory, prepaid expenses, supplies, marketable securities, etc.

Preparing adjusted trial balance follows adjusting entries