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FAR.2650 Accounting Process

The document outlines the key steps in the accounting process: 1) Analyze business documents and journalize transactions 2) Post transactions to ledger accounts and prepare a trial balance 3) Prepare adjusting entries for accrued expenses, prepaid expenses, and inventory 4) Prepare financial statements such as the income statement and balance sheet It also provides examples of journal entries for various accounting adjustments.

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99 views18 pages

FAR.2650 Accounting Process

The document outlines the key steps in the accounting process: 1) Analyze business documents and journalize transactions 2) Post transactions to ledger accounts and prepare a trial balance 3) Prepare adjusting entries for accrued expenses, prepaid expenses, and inventory 4) Prepare financial statements such as the income statement and balance sheet It also provides examples of journal entries for various accounting adjustments.

Uploaded by

lijeh312
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Accounting Process

(FAR.2650)

R. R. Ocampo
The Accounting Process
• Analyze business documents
• Journalize transactions
• Post to ledger accounts
• Prepare a trial balance
• Prepare adjusting entries
• Prepare financial statements
(using a work sheet or from the adjusted
individual accounts)
• Close the nominal accounts
• Prepare a post-closing trial balance (optional)
• Prepare reversing entries (optional)
Problem No. 3 Answer is letter C

Assets = Liabilities + Equity

(P69T) = (P54T)
? + (P15T)
Problem No. 4 Answer is letter C

Change in Change in Effect on


Assets Liabilities Equity
Increase Increase
Decrease Decrease
Increase Decrease
Decrease Increase

Equity, 1/1 P15M


Increase in assets 3M
Decrease in liabilities 1M
Equity, 12/31 P19M
Answer No. 7 is
letter A
2,750

800
8,000
4,400
560

12,700
6,690

1,400
900

P24,350 P24,350
Mistake, Drawing 1,500
Answer No. 10 is letter A

Prepaid Insurance
Beginning + 5,600 1,700? Adjustment
Payments + 2,500

Ending - 6,400

Adjusting entry made:

Insurance expense P1,700


Prepaid insurance P1,700
Answer No. 11 is letter D
Unearned Rent
Adjustment 5,000? 11,000 Beginning +
9,000 Collection +

15,000 Ending -

Adjusting entry made:

Unearned rent P5,000


Rent income P5,000
Problem No. 12 Answer is letter C

Original journal entry:

Rent expense ?
Cash ?

Original amount:
(P1,800/9 x 12) = P2,400
Problem No. 13 Answer is letter C

Original journal entry:

Cash ?
Rent income ?

Original amount:
(P900/2 x 12) = P5,400
Problem No. 14

Adjusting journal entry:

Inventory, end P 97,900


Cost of goods sold ?
Purchase discounts 2,140
Purchase returns 26,710
Inventory, beg. P188,250
Purchases 142,700
Freight-in 12,880
Problem No. 14 Answer is letter B

Adjusting journal entry:

Inventory, end P 97,900


Cost of goods sold 217,080
Purchase discounts 2,140
Purchase returns 26,710
Inventory, beg. P188,250
Purchases 142,700
Freight-in 12,880
Adjusting entry method
Income statement Balance sheet
Debit (Credit) Debit (Credit)

Inventory, beg. P188,250

Purchases 142,700

Freight-in 12,880

Purchase discounts 2,140

Purchase returns 26,710

Inventory, end 97,900 P97,900

Cost of goods sold - P217,080


Direct extension method
Income statement Balance sheet
Debit (Credit) Debit (Credit)

Inventory, beg. P188,250 P188,250

Purchases 142,700 142,700

Freight-in 12,880 12,880

Purchase discounts 2,140 ( 2,140)

Purchase returns 26,710 ( 26,710)

Inventory, end 97,900 ( 97,900) P97,900


AJE that may be reversed
• Accrual of income
• Accrual of expenses
• Prepayment – expense method
• Unearned item – income method

Journal entry, 12/31


Interest receivable (P30T x .08 x 9/12) P1,800
Interest income P1,800

Journal entry, 4/1


Cash P2,400
Interest receivable P1,800
Interest income 600

Answer No. 18 is letter C


DIY Drill Answers
1. C
2. B
3. C
4. D
5. A
6. D
7. A
 End 

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