For this week’s discussion, submit your initial discussion post by responding to

Question

For this week’s discussion, submit your initial discussion post by responding to the following:

1.    Provide an explanation for each step in the accounting cycle (Hint: There are 10 steps)
2.    Explain why permanent (balance sheet) accounts are not closed

3.    Using the adjusted trial balance for Company Zee, complete the following:

Describe the temporary (income statement) accounts for Company Zeeb.   

Explain the closing entries that Company Zee will need to prepare at the end of the accounting period (Hint: There are 4 steps/closing entries required).

Explain the purpose of the Income Summary account

Adjusted Trial DebitCredit Notes receivable (current) 50,000 4,000 57,000 52,000 63,000 178,500 C. Trout, Capital 80,800 7,500 Depreciation expense-Equipment... 28,500 5,700 538,800 538,800

Explanation / Answer

1.Explanation for each step in the accounting cycle:

Transaction:

Journal:

?Legder:

Trail balance:

Preparation of financial statements:

Adjustments in final accounts:

?closing entries for preparation of final accounts:

The journal entries that are necessary to transfer the balances of nomial accounts to trading and profit and loss a/c are known as closing entries,because they close the nomial accounts by transfer to the final accounts.

Preparation of post closing trail balance:

Post closing trail balance is prepared to know the accuracy of books of accounts.

Interpretation of financial information:

2.Explanation for why permanent accounts are not closed:

Permanent accounts are real accounts such as assets of the business whose balances are carried over accounting periods because the business is benefited from assets over a long period of time.

3.Temporary accounts for company Zeeb:

Nomial accounts are temporary accounts because these accounts are closed by transfer of balances to profit and loss a/c.Temporary accounts generally will have life of one accountion period only hence these nomial accounts are called temporary accounts.

List of temporary accounts of Zeeb limited:

Closing entries that company need to prepare at the end of the accounting period   

.Wages a/c Dr 85,000

Rent a/c Dr 48,000

Insurance a/c Dr 6,000

Interest a/c Dr 5,700

To profit and loss a/c 144,700

For depreciation, it will not affect profit and loss a/c because the company is accumating depreciation.so, depreciation expense will go to accumlated depreciation a/c.

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