Resources:

• Text:
  • chapter 7 (correcting entries, pages 216-222);
  • chapter 8 (Six-Column Worksheet, pages 251-259)
  • chapter 9 (adjusting and closing entries, pages 303-323)
• Handouts:
  • Understanding Correcting Entries
  • Adjusting for Depreciation
  • Disposal of Depreciated Assets

Practice:

• Entry Identification - Formative Quiz (You must sign into Blackboard before clicking this link.)
• Correcting Entries - Formative Exercise (You must sign into Blackboard before clicking this link.)
• Adjustments - Formative Quiz (You must sign into Blackboard before clicking this link.)
• Closing Entries - Formative Quiz (You must sign into Blackboard before clicking this link.)

• Practice test (Journals)
  • Practice test Answer Key (Journals)
• Practice test (Worksheet)
  • Practice test Answer Key (Worksheet)

Requirements: 

In order to successfully complete this test, the student should be able to perform the following tasks:

• correct an error using either of the following methods:

  • "reverse-and-re-enter" approach,
  • "error-cancelation" approach.

• distinguish between an adjusting entry and a transaction entry;

• understand the function of adjusting entries;

• explain/identify the substance of any of the following GAAPs related to adjustments:
  • matching principle,
  • materiality principle,
  • principle of conservatism,
  • cost principle.

• know and understand the concept of prepaid expenses;

• understand how to adjust for the following prepaid expenses:

  • prepaid insurance
  • prepaid rent
  • supplies on hand

• know and understand the concept of depreciation;

• be able to calculate depreciation on a fixed asset using either the:
  • straight line method, or the
  • percentage of declining balance method

• be able to apply the Canada Revenue Agency's 50% rule;
• be able to apply the "nearest whole month" rule;

• be able to properly use the following accounts related to depreciation:
  • any fixed asset account (ie. computer, building, automobile)
  • accumulated depreciation account (contra-asset account)
  • depreciation expense

• incorporate adjustments within a 6-Column Worksheet, thus creating an Eight-Column Worksheet

• understand and explain the process involved in closing the revenue, expense, and drawings accounts in order to update the owner's capital account.

• demonstrate these closing entries within either a General Journal or a General Ledger.

• differentiate between:
  • real accounts and nominal accounts,
  • the Trial Balance and the Post-Closing Trial Balance, as well as
  • the Income Summary (or Revenue and Expense Summary) account and other Owner's Equity accounts.

• prepare a post-closing trial balance.
• complete the entries within a journal, or a ledger, which would record the disposal of a fixed asset under any of the following conditions:
  • sale for disposal value,
  • sale for more than disposal value, and
  • sale for less than disposal value.

• define any of the following terms:
  • accrued revenue,
  • accrued expense, and
  • unearned revenue

• calculate a portion of a revenue earned, or an expense incurred, as an "accrued revenue" or an "accrued expense" for a given accounting period,

• complete an entry within a worksheet, journal, or a ledger that adjusts for any of the following:
  • accrued revenue,
  • accrued expense,
  • unearned revenue

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