Chapter 4Completing the Accounting Cycle

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Learning Objectives

After studying this chapter, you should be able to:

1 Prepare a worksheet.

2 Explain the process of closing the books.

3 Describe the content and purpose of a post-closing trial balance.

4 State the required steps in the accounting cycle.

5 Explain the approaches to preparing correcting entries.

6 Identify the sections of a classified statement of financial position.

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Feature Story

Speaking the Same Language

Recent events in the global capital markets underscore the importance of financial disclosure and transparency in markets around the world. As a result, many countries are examining their accounting and financial disclosure rules. As indicated in the graphic on the next page, financial regulators in over 120 countries now use the IFRSs issued by the International Accounting Standards Board (IASB).

What are the potential benefits of having countries use similar standards to prepare their financial accounts? One benefit is that investors can compare the results of competing companies from different countries. A second benefit is it enhances efforts to finance growth. Companies (particularly in developing and emerging ...

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