Discuss the objectives for Week Three. How do they relate to the practice of accounting and its uses in business? Write a 350- to 500-word summary of your Learning Team’s discussion.
Accounting is the language for every business. It is the system that records all the financial transactions. Every quarter or at the end of the year there must be adjusting entries to ensure the balances match. The three adjusting entries to be made are the closing entries, reversing entries, and a post-closing trial balance. The classified income statement, balance sheet and dividends become a zero balance and transfer into the retained earnings. These three steps will ensure that the income statement, retained earnings statement, and balance sheet are finalized.
* An income statement, retained earnings statement, and balance sheet record assets, liabilities and revenue. An income statement takes the basic equation, revenue – expenses, to determine the company’s net income. The net income is then transferred at the end of an accounting period (usually annually) to retained earnings, which is visible on the balance sheet and the statement of retained earnings. Retained earnings statement presents the changes in equity for thse accounting period. The primary change in equity is from the net income reclass as previously discussed, but there will be other changes as well. These other changes could include a distribution of income or possibly the