Page 194 - Accounting Principles (A Business Perspective)

4. Completing the accounting cycle

Describe the nature of each item on the classified balance sheet. You may have to do library research on some of the
items. Also, calculate the current ratio for the most recent two years and comment. Write a report to your instructor
summarizing the results of the project.

Group project F With a small group of students and using library sources, write a paper comparing the
features of three different accounting software packages (such as Peachtree Complete, Quikbooks Pro, DacEasy,
MYOB Business Essentials, NetSuite Small Businee and Cougar Mountain ). Give the strengths and weaknesses of
each. Cite sources for the information and treat direct quotes properly.

Using the Internet—A view of the real world
Visit the following Internet site:
http://www.merck.com
Pursue choices you are offered on the screen under Investor Relations until you locate the most recent
consolidated balance sheet. In a short report to your instructor, describe how you got to the balance sheet and
identify the major headings used in the balance sheet. For instance, the first such heading is Assets. Also, calculate
the current ratio.
Visit the following Internet site:
http://www.kodak.com

Type in "Annual report" in the search box to locate the most recent annual report and then find the consolidated
statement of financial position. Identify the major headings within the balance sheet and calculate the current ratio
for the most recent year. Write a memo to your instructor summarizing your findings.
Answers to self-test

True-false
True. The three trial balances are the unadjusted trial balance, the adjusted trial balance, and the post-closing
trial balance. The first two trial balances appear on the work sheet.
False. If a debit-balance account (such as Prepaid Rent) is credited in the adjustment, the amount in the
Adjustments columns is deducted from the amount in the Trial Balance columns to determine the amount for that
item in the Adjusted Trial Balance columns.
True. The net loss appears in the Income Statement credit column to balance the Income Statement columns.
Then the loss appears in the Statement of Retained Earnings debit column because it reduces Retained Earnings.
True. All of these accounts are closed, or reduced to zero balances, as a result of the closing process.

False. All revenue and expense accounts have zero balances after closing.
False. Some manual accounting systems are still in use.
Multiple-choice
b. The other accounts are very likely to be adjusted. The Land account would be adjusted only if an error has
been made involving that account.
c. The Adjusted Trial Balance columns should balance before items are spread to the Income Statement,
Statement of Retained Earnings, and Balance Sheet columns. Therefore, if the Balance Sheet columns do not

balance, the error is likely to exist in the last six columns of the work sheet.
d. The net income for the period does not appear in the balance sheet. It does appear in all of the other places
listed.

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