Page 149 - Accounting Principles (A Business Perspective)

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4. Completing the accounting

cycle

Learning objectives
After studying this chapter, you should be able to:
• Summarize the steps in the accounting cycle.
• Prepare a work sheet for a service company.
• Prepare an income statement, statement of retained earnings, and balance sheet using information contained
in the work sheet.

• Prepare adjusting and closing entries using information contained in the work sheet.
• Prepare a post-closing trial balance.
• Describe the evolution of accounting systems.
• Prepare a classified balance sheet.
• Analyze and use the financial results—the current ratio.

A career in information systems
Have you ever heard the sayings "knowledge is power" or "information is money"? When people talk about
accounting, what they are really talking about is information. The information used by businesses, as well as the
technology that supports that information, represents some of the most valuable assets for organizations around
the world. Very often, the success of a business depends on effective creation, management, and use of information.
As companies become ever more reliant on technology, the need for well-educated Management Information

Systems (MIS) auditors and control professionals increases. Improved technology has the potential to dramatically
improve business organizations and practices, reduce costs and exploit new business and investment opportunities.
At the same time, companies face constant challenges in selecting and implementing these new technologies.
Because of their high value and inherent complexity, the development, support, and auditing of information
systems has become one of the fastest growing specialties in accounting.
Graduates with special interests and skills in computing and technology have expansive opportunities. In
addition to traditional accounting and auditing functions, MIS professionals perform evaluations of technologies

and communications protocols involving electronic data interchange, client servers, local and wide area networks,
data communications, telecommunications, and integrated voice/data/video systems. In public accounting,
technology has impacted the auditing profession by extending the knowledge required to draw conclusions and the
skills required to audit advanced accounting and information systems.
With management consulting practices growing and information systems becoming a larger percentage of public
accounting revenue, MIS professionals are in high demand. If you are considering a degree in computer or
information systems, you should consider the advantages that an accounting major or minor can give you in

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