Great job making it through all of the financial accounting topics up to this point. We are about to head into managerial accounting for the remaining third of the course. Before we do, let's refresh on the topics that we have covered up to this point.
First, we have covered the various principles and concepts that underlie the double entry accounting system that we use to record transactions. Although the principles aren't explicitly referenced when you record most journal entries, they are needed when trying to determine what amount to record, how to record it, and when.
Next, we talked about the normal balance rules that help you to determine how debits and credits impact each different type of account. We then talked about how to journalize the entries and then how to post those to the T accounts/general ledgers. Remember that when recording a journal entry, the total debits for each account must equal the total credits for each account in the journal entry.
Once we completed the posting of the transactions, we then use that to prepare an unadjusted trial balance. Remember that the trial balance brings the debit or credit balances of each account into one summary report to show what those balances are. Just as a reminder, the total debits in the trial balance must equal the total credits.
Next come the adjusting entries, which we first journalize, post, and carry over to to an adjusted trial balance.
We use this adjusted trial balance to complete the four financial statements (income statement, retained earnings statements, balance sheet, and statement of cash flows.)
Finally, we prepare and post the closing entries. Then, we arrive at the final trial balance (the post-closing trial balance.)
These topics up to this point are extremely important and the concepts carry over to the managerial accounting side, since we do journal entries on that side as well.
From that point on we cover the different types of assets, liabilities, and equity items as well as how to record them and how to create financial statements.
Hopefully as you have read through this refresher these concepts rang a bell. If not, feel free to check back into those sections before continuing onto managerial accounting. Otherwise, let's head into the later topics!
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