Introduction to Accounting
Preparing for a User’s Perspective
Prepare financial statements
By Kevin C. Kimball, CPA
with support from
Debits and Credits Trainer
www.canvas.net
Free Jan. 2014
Available on the
Google Play Store
Part A
The Full Accounting Cycle
Original
Transaction
Entries
Adjusting
Entries
Identify
Analyze
Record
Post
Prepare
Pre-adjusted TB
Identify
Analyze
Record
Post
Prepare
Adjusted TB
Financial Statements
Closing
Entries
Identify
Analyze
Record
Post
Prepare
Post-Closing TB
Part A
2) Analyze
1) Identify
5) Prepare*
Adj. Trial Balance
Steps in the
Accounting
Cycle
a) What accounts?
b) Increase or decrease?
c) Amount $?
d) Debit or credit?
3) Record
Date
4/8
DR (CR)
Cash
146,590
Accounts Receivable 13,000
Inventory
10,000
Etc.
Etc.
Accrued Expenses (3,400)
Etc.
Etc.
Total
$0 * This round includes preparation of financial statements
Account
Utilities Expense
4) Post
Accrued Expenses
Debit
Credit
400
400
Util. Expense Accrued Liab.
3,000
400
0
400
Part A
Continued on next slide
Suepervantastic Toy Company (STC)
Current asset
Current asset
Current asset
Contra asset
Current asset
Current asset
Current asset
Noncurrent asset
Noncurrent asset
Contra asset
Contra asset
Current liability
Current liability
Current liability
Current liability
Current liability
Part A
Continued from prior slide
Suepervantastic Toy Company (STC)
Noncurrent liability
Equity
Equity - Dividend
Equity - Revenue
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Expense
Equity - Revenue
Equity - Revenue
Equity - Expense
Equity - Expense
Part A
Preparing the Financial Statements 1-4
1. The Income Statement
2. The Statement of Stockholders’ Equity
• particularly the Statement of Retained
Earnings
3. The Balance Sheet
4. The Statement of Cash Flows
Part A
Part A
Suepervantastic Toy Co.
Balance Sheet
3/1/X1
Cash
Etc.
Total Assets
Total Liabilities
Common Stock
Retained Earnings
Total Shareholders’ Equity
Statement of Cash Flows
Operating activities
Investing activities
Financing activities
Change in Cash
+ Beginning Cash
= Ending Cash
Statement of Shareholders’ Equity
Common Retained
Stock
Earnings
Beginning balance
+ Issuance of stock
+ Net Income
- Dividend
.
= Ending balance
Suepervantastic Toy Co.
Balance Sheet
12/31/X1
Cash
Etc.
Total Assets
Total Liabilities
Common Stock
Retained Earnings
Total Shareholders’ Equity
Income Statement
Revenues
Less: Expenses
= Net Income
Part A
Please take out a scratch piece of paper and use the adjusted account balances on
the following page to prepare a Single-Step Income Statement. Formatting hint:
Company Name
Income Statement
The accounting period being reported on
List all revenues and their balances
Total Revenues $
List all expenses and their balances
Total Expenses $
= Net Income $
Earnings per share
Part A
Part A
Single-Step
Income Statement
(complete)
Part A
Single-Step
Income Statement
(Page 1)
Part A
Single-Step
Income Statement
(Page 2)
Part A
Please take out a scratch piece of paper and use the adjusted account balances on
the following page to prepare a Multi-Step Income Statement. Formatting hint:
Company Name
Income Statement
The accounting period being reported on
Net Sales Revenues
- Cost of Goods Sold
= Gross Profit
- Operating expenses
= Operating Income
+ Other Revenues – Other Expenses
= Income before taxes
- Income taxes
= Net Income
Earnings per share
Part A
Part A
Multi-Step
Income Statement
(complete)
Part A
Multi-Step
Income Statement
(page 1)
Part A
Multi-Step
Income Statement
(page 2)
Part A
Please take out a scratch piece of paper and use the adjusted account balances on
the following page and the Net Income from the Income Statement to prepare a
Statement of Stockholders’ Equity (aka Statement of Shareholder Equity).
Formatting hint:
Company Name
Statement of Stockholders’ Equity
The accounting period being reported on
Common Stock
Beginning balance
+ Net Income
- Dividends
+ or – Changes in Stock Outstanding ____________
Ending balance
____________
Retained Earnings
______________
______________
Part B
Part B
Part B
Formatting hint:
Please take out a scratch
piece of paper and use
the adjusted account
balances on the
following page and the
ending Retained
Earnings balance from
the Statement of
Stockholders’ Equity
(i.e. specifically the
Statement of Retained
Earnings) to prepare a
classified balance sheet
as of 12/31/X1.
Company Name
Balance Sheet
As of the end of the accounting period being reported on
Assets
Liabilities
Current assets
$ Current liabilities
Noncurrent assets
Noncurrent liabilities
Total Assets
$
Total liabilities
$
Stockholders’ Equity
Contributed capital
Retained Earnings
Total Stockholders’ Equity $
Total liabilities and
stockholders’ equity $
Part B
Current asset
Current asset
Current asset
Noncurrent liability
Equity
Current asset
Current asset
Current asset
Current asset
Noncurrent asset
Noncurrent asset
Contra asset
Contra asset
Current liability
Current liability
Current liability
Current liability
Current liability
Part B
Balance Sheet
(page 1)
Part B
Balance Sheet
(page 2)
Part B
Part B
Statement of Cash Flows
(full statement)
Part B
Statement of Cash Flows
(page 1)
Part B
Statement of Cash Flows
(page 2)
Part B
Introduction to Accounting
Preparing for a User’s Perspective
Prepare financial statements
By Kevin C. Kimball, CPA
with support from
Debits and Credits Trainer
www.canvas.net
Free Jan. 2014
Available on the
Google Play Store
Part B