Purchase Solution

How accounting practices are used in businesses?

Not what you're looking for?

Ask Custom Question

How do the following relate to the practice of accounting and its use in businesses?

1. Preparation of closing entries, reversing entries and the post-closing trial balance
2. Preparation of a classified income statement, retained earnings statement and balance sheet.

Purchase this Solution
Solution Summary

Your discussion is 543 words and explains how these procedures are completed in the field.

Solution Preview

1. Preparation of closing entries, reversing entries and the post-closing trial balance

Closing entries and the post closing trial balance are needed to ensure that that period's activity is kept separate from this month. These are typically done monthly or at least when financial statements are desired (quarterly or annually). Reversing entries are typically used for accruals for which the actual bill is expected in the next month. For example, if the power bill comes on the 10th of the month, the accrual will be an estimate at month end. So, an accrual of $800 is made. When the actual bill comes in, only the increment above $800 should be expensed since $800 is already booked. If you reverse the accrual and expense the bill as paid, the net will automatically wash in this period's account:

Ga Power Bill $812.
Reverse ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Introduction to Finance

This quiz test introductory finance topics.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

View More Free Quizzes
Related BrainMass Solutions

  • What are International Financial Reporting Standards?

    IASB is an independent accounting practices setting body, headquartered in London. Financial reporting agencies and MNEs are adopting or have already accepted IFRS for accounting practices.

  • FASB versus GASB

    What are the similarities and differences in the accounting practices between the two?

  • Tradeoffs in assessing and utilizing cost accounting system

    410857 Cost Accounting - tradeoffs in assessing and utilizing cost accounting systems? What are the relative tradeoffs in assessing and utilizing cost accounting systems?

  • SOX, DuPont Analysis, Liquidty Questions, and SEC

    Companies are not starting to treat internal control as a hindrance but as a ethical asset to the organization. Although laws do not create ethical businesses, it has helped to shine a spotlight on the accounting practices of many companies.

  • Sample Questions

    How are the Sherman Act and the Clayton Act still relevant today? Describe how the Sarbanes-Oxley Act, the Foreign Corrupt Practices Act, and other statutes affected the Sherman and Clayton Act.

  • The ultimate goal of harmonization of accounting reporting

    In addition, in the U.S., there would be significant damage to small businesses as any integration of uniform accounting standards would necessitate higher costs for these small businesses because of additional compliance regulations.

  • Benefits and disadvantges of using ratio analysis

    Through trend analysis, you can identify trends, good and bad, and adjust your business practices accordingly. You can also see how your ratios stack up against other businesses, both in and out of your industry."

  • Accounting Information Systems Vital to Businesses Success

    · So many businesses have problems in this area because: · Accounting and finance personnel are familiar with traditional accounting controls and methods and as such are not trained in modern information technology.

  • Cost accounting vs financial accounting

    different types of accounting that are used by firms.

  • Governmental Accounting Standards

    Governmental Accounting Standards (GASB) is primarily principle-based while U.S. GAAP (FASB) is rules-based. The difference between approaches between GASB and FASB is in the methodology used in accounting.

View More Related Solutions