Week 4 Reflection Summary

Running head: WEEK FOUR REFLECTION 1

Week Four Reflection Summary

Team A

ACC/290

February 4, 2013

Lina Assaad

Week Four Reflection 2

Week Four Reflection Summary

At the end of the accounting period, a company prepares an adjusted trial balance showing general ledger accounts with balances after adjustments (Kimmel, Weygandt, & Kieso, 2009, p. 181). The purpose of the adjusted trial balance is to prove debit and credit balances equal in revenue, expense, asset, liability, and equity accounts in preparation of company financial statements. Revenue and expense data from the adjusted trial balance inputs directly into the income statement to determine net income or loss. In addition, the retained earnings and dividends data inputs into retained earnings statement with assets, liabilities, and stockholders’ equity transferred to the balance sheet (Kimmel, Weygandt, & Kieso, 2009, p. 182).

Closing Entries

Closing entries transfer net income or loss of a period to retained earnings. This clears the temporary account balances by moving the funds in the revenue and expense accounts to the income summary account. The income summary and the dividend funds move to the retained earnings account. After the closing process, a post-closing trial balance is prepared with the permanent accounts found on the balance sheet to check equality of these accounts that will carry over to the next period (Kimmel, Weygandt, & Kieso, 2009, p. 184).

Quality of Earnings

The accounting cycle is as follows: analyze business transactions, make journal entries, post to the ledger, trial balance, adjusting journal entries, adjusted trial balance, financial statements, closing entries, and the post-closing trial balance. If these are not prepared in the correct order it could lead to a misrepresentation of earnings or loss in a company. Each statement's information depends on the...