Finance Questions? Ask a Financial Expert for Answers ASAP
1. Balance Sheet
2. Income Statement or statement of operations
Statement of retained earnings or partners capital
4. Cash flow statement
then explain how the income statement and the balance sheet interact. - the net income from the income statement is reported as a credit on the balance sheet (if profitable) in the shareholders equity section of the balance sheet, generally as "netted" balance with retained earnings or partners capital.
What are the steps in completing the accounting cycle? - Steps to the accounting cycle are 1. record transactions as journal entries. 2. post to the ledgers 3. prepare the trial balance 4. prepare adjusting entries 5. prepare the adjusted trial balance 6. prepare the financial statements 7. make the closing entries 8. prepare the after-close trial balance.
How do the different steps affect the financial statements? - every step up to #5 is used to prepare the financial statements and provides the underlying data/transactions/numbers for the financial statements.
Why are the financial statements prepared in that order (1-4)?
Oh sorry - I read what order they are presented.
my mistake - the order prepared is
1. income statement
2 Owners eqiuty
3. balance sheet
4 cash flows
sorry my mistake.
Something happened to our prior chat and I can no longer see my prior posts.
I was asking why the financial are prepared in that order. I appreciate your response.
They are prepared in that order because the net income/loss number is XXXXX for the statement of owners equity.
The balance sheet needs the owers equity statement to be right and uses these figures
the cash flow is done last because everything else must be right prior to preparing this statement. It uses figures from both income statement and balance sheet.
Does that make sense?
What about explaining fiscal year vs calendar year?
A fiscal year is everything that is not a calendar year. A calendar year starts on Jan 1 and ends Dec 31.
Some business prefer a different year end as it more appropriate for thier line of business.
Such as a Turkey farmer. He may want his year end to be Nov 30th so that he closes his year end after his busiest time of year, and it also matches up his expenses for the year to the period in which the revenues where earned.
Let's assume in the example above he starts raising meat birds Dec 1st. it takes him up to Sept to grow the bird for resale, then it is sold in Oct. This accounting period properly reflects the revenues and expenses to the cycle in which they were earned.
Does that help?
Yes, that helps a lot. Thanks, XXXXX XXXXX accept this answer.
Glad I could help. Let me know if you ever have additional questions. You can also ask me directly here - http://www.justanswer.com/finance/expert-ustaxadvising/
I just realized you missed answering a part of my original question which was:
What is the effect on the financial statements of missing a step when completing the accounting cycle?
What is the effect on the financial statements of missing a step when completing the accounting cycle? - if one misses a step in the accounting cycle such as making adjusting entries the financial statements (FS) could be materially misstated. Such adjustments may be for depreciation and if the company made a substantial fixed asset acquisition in the period a significant expense may not have been reported and this income would be overstated.
Are availalbe to complete a worksheet?
Are you availalbe to complete a worksheet today (03/17/12)?
Is there a way I could have a look at the assignment?
How can I attach the worksheet?