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Accounting Steps

  1. Choose any problem from the list below. Create a solution, using the way of five steps (methodical way).
  2. Footsteps echoed from within the cabin.
  3. Mr. and Mrs. Weasley came racing down the back steps, Ginny behind them. Both parents hugged Ron before turning to Lupin and Tonks.
  4. Six Steps for Resolving Conflicts
  5. Structured approachThe movement from a logical design to a physical design following a set pattern of steps. Also called top-down approach.
  6. The floor trembled; there was a sound of running footsteps, then the door to the sitting room burst open and Mr. and Mrs. Weasley ran in.

Each time an item is purchased or sold, a bookkeeper performs the first three steps of cycle and passes on the information to the accountant who carries out the last four steps such as:

1)calculate adjustments;

2)prepare adjusted trial balance;

3)prepare financial statements;

4)close entries.

The most common reasons the accountant should consider preparing adjustments are the following: increased revenue (for example, interest earned but not yet received); any government taxes or employee salaries that have not been yet paid; the value of the office supplies that have not been used (electricity, water, etc); depreciation of the assets; changes in the inventory, etc. As to inventory, it involves the physical measurement, counting and evaluation of items for sale. Inventory evaluation is subject to a variety of accounting methods, since many inventory items cannot be specifically calculated. The grain in a grain elevator, for example, comes from different sources and may have been bought at several prices. An accountant must choose between one of several methods for valuing the grain; each will provide a slightly different value figure.

On the fifth step when the adjustments are calculated, the accountant prepares an adjusted trial balance that combines the original trial balance with the effects of the adjustments. The balances in the accounts are the data that make up the organization's financial statements as a balances sheet and an income statement. The preparation of these statements is considered to be the main purpose of the sixth step. The final step comprises a series of bookkeeping debits and credits to transfer sums from income statement accounts into owner's equity accounts, thus into capital. Such transfers reduce to zero the balances of all accounts, therefore the accounting books will be ready for the next accounting period.

Comments:

1.close entries - закрити рахунки

2.inventory - товарно-матеріальні цінності

3. evaluation - оцінка

Answer the questions:

1.Why is it necessary to make adjustments in a balance sheet?

2.What does the term "inventory" mean for an accountant?

3.Is the balance sheet considered to be the final important financial document of the company?

4.What account does closing entries affect?

TEXT C

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SELF-STUDY WORK | Fiscal Policy

Income Elasticity of Demand | Price Elasticity of Demand and Supply | Part II | Vocabulary Exercises | Topic 2: Financial and Managerial Accounting | Vocabulary Exercises | Topic 3: Bookkeeping as Part of Accounting Cycle | Vocabulary Exercises | Topic 4: Auditing | Vocabulary Exercises |

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