Вы находитесь на странице: 1из 3

Chapter 8 - Trial Balance, Financial

Reports and Statements

analysis and examination of the


accounts

Financial Reporting System


8 Steps in Accounting Cycle
- analyzing the transactions
- journalizing the transactions
- posting the JE
- preparation of TB
- adjusting the accounts
- closing the accounts
- preparation of the FS
- reversing the accounts
Under NGAS, Fin. Rep. includes:
- preparation and submission of TB,
F/S and other reports needed by
fiscal and regulatory agencies
Subsystems:
1. Preparation and submission of TB
and other reports
2. Preparation and submission of FS
Trial Balance
- A listing of GL accounts with their
corresponding debit and credit
balances
- used to determine quality of dr. and
cr. Balances after the recording
process
- may be prepared anytime, usually
before financial statements are
prepared
- two-money column trial balance is
required under NGAS
Purpose:
1. To prove the mathematical equality
of the Dr. and Cr. After posting
2. To uncover errors in journalizing
and posting
3. To serve as basis for the
preparation of the F/S
Worksheet
- a columnar sheet of paper on which
accountants have summarized
information needed to make the
adjusting and closing entries and to
prepare the FS
- useful tool the auditor in the

Columns Contained:
1.
2.
3.
4.
5.
6.
7.
8.

Account Title and Code


Columns
Unadjusted TB Columns (Dr
and Cr)
Adjustments Columns (Dr
and Cr)
Adj./Pre-Closing TB Columns
(Dr and Cr)
Closing Entries Columns
Statement of Inc. & Exp.
Columns (Dr and Cr)
Post-closing TB Columns (Dr
and Cr)
Balance Sheet Columns (Dr
and Cr)

Steps in Preparing:
1.

2.

3.

4.

5.

Enter title and bal. of the


ledger accounts in the PreClosing TB Columns
Enter the adj. JE and the
closing entries in the
Adjustments Column
Extend the Adj. account bal.
in the Post-Closing TB
column
Extend the adj. bal. of the
expense and income
accounts to the Statement
of Income and Expenses
column
Extend the adj. balance of
the assets, liabilities and
equity accounts to the Bal
Sheet column

Adjusting JE
- The Pre-Closing TB (Adj. TB) is
prepared after adj. JE are recorded in
the GJ and posted in the GL which
shows the adj. bal. of all accounts as
of a given period
- Under NGAS, revenue and expenses
are adjusted to reflect economic
activities that have taken place, but
are not yet considered or recorded
when the FS were

prepared(Matching Principle)
-made to ensure that revenues and
expenses are recorded in the period
when they are earned or incurred.
Two Main Types:
1. Accrued items requires 2 types of
Adj. JE
a. Asset/Revenue Adj.
ILLUSTRATION: (Interest Income)
The interest rec. account of Agency
ABC for the interest already earned
but not yet collected nor billed as of
the end of the year amounts to
P2,000.
Interest Rec.
Interest Inc.

1-03-01050
4-02-02210

5-01-01010
2-01-01020

Impairment LossLosses & Rec.


Allowance for
Impairment- AR

2,00
0

Assets

Cost

Bldg.

50,000,0
00
150,000
100,000

Mach.
Off.
Eq.
F&F
Mtr V.

25,0
00

75,000
10,000,0
00
10,000

Illustration 1 (Prepaid Expense)


Agency ABC has prepared expenses
in the amount of P20,000 portion of
which were utilized or consumed in
the amount of P5,000. Since the
original entry was debited to Prepaid
account, the AJE will be:

Prepaid Rent

5,00
0

DE Bldg. & Other


Stru.
AD Bldg.&
Other S.

DE Mach. & Eq.

DE Mach. & Eq.


AD Office Eq.

DE F&F and
Books

5,00
0
5,00
0

Illustration 2 (Bad Debts)


Per aging of accounts, the required
allowance is P20,000; while the
beginning balance of the allowance

Useful
Life
20
5
5
10
10
5

Depn
2,250,0
00
27,000
18,000
6,750
900,00
0
1,800

The AJE to record Depn:

AD Mach.

5-02-99050
1-99-01020

5,00
0

Illustration 3 (Depreciation)
Records of Agency ABC show the
following depreciable assets, with
10% salvage value as provided by
COA:

Books

25,0
00

2. Deferred items requires 2 types


of Adj JE
a. Asset/Expense Adj.
- Prepaid Exp., Bad Debts &
Depn

Rent/Lease Exp.

5-05-03020
1-03-01011

2,00
0

a. Liability/Expense Adj.
ILLUSTRATION: (Accrued Salaries)
As of year-end, Agency ABC has not
yet paid salaries and wages of
P25,000 which covers the period Dec.
16-31, 2004.
Salaries & Wages
Reg
Due to Officers &
Emp

for bad debts is P15,000. No other


transactions transpired.

AD F&F

DE Trans Eq.
AD Motor
Vehicle

5-05-01040
1-06-04011

2.25
M

5-05-01050
1-06-05011

27,0
00

5-05-01050
1-06-05021

18,0
00

5-05-01070
1-06-07011

6,75
0

5-05-01060
1-06-06011

2.25
M

27,0
00

18,0
00

6,75
0

900,0
00
900,0
00

DE F&F and
Books
AD Books

5-05-01070
1-06-07021

theres no need to issue an MDS


check when reverting the account.

1,80
0
1,80
0

Subsidy from NG
Cash MDS
Reg.

4-03-01010
1-01-04040

500,0
00

Rev. & Exp.


Summary

500,0
00

a. Liability/Revenue Adj.
Illustration
The agency collected an amount of
P15,000, for the rent of its facility and
originally recorded it as deferred
credit to income. At the end of the
year, only P3000 was earned.
Other Deferred
Credits
Rent/Lease
Income

2-05-01990
4-02-02050

3,00
0
3,00
0

Closing JE
- GJ Entries, which zeroes out the
balances of all nominal/temporary
and intermediate accounts at the end
of the accounting period.
- Nominal Accounts: subsidies,
income and expenses accounts and
are closed to Revenue and Expense
Summary.
- Intermediate Accounts: closed
ultimately to the Acc. Surplus/Deficit
account at the end of the accounting
period

2. Close the balance of all income


accounts to Revenue and Expense
Summary account
Processing Fees

4-02-01030

35,000,0
00

Other Business Inc.

4-02-02990

255,000

Rent/Lease Inc.

4-02-02050

123,000

Interest Inc.

4-02-02230

14,500

Gain on Sale of PPE

4-05-01040

80,000

Other Service Inc.

4-02-01990

350,000

Rev. & Exp.


Summ

3-03-01010

Acc. Surplus/Def.

Road Networks

35,822,5
00

3. Close the balance of all exp.


Accounts to Revenue and Expense

Illustration:
Using the unadj. TB of Agency ABC
and the adj. JE in the preceding
section, the ff. nominal and
intermediate accounts shall be
closed:
Summary Account
4. Close the balance of the Rev. &

3-03-01010

30,341,6
65

3-01-01010

30,341,6
65

5. Close the Public Infrastructure


account to Acc. Surplus/Deficit and
transfer the corresponding amounts
to the respective assets.
Acc. Surplus/Deficit

- Post-Closing TB shall be prepared


after recording the closing JE in the GJ
and posting these entries to the GL. It
contains a listing of all real accounts
in the GL.

1. Reversion of the unused Subsidy


from NG at the end of the year due to
the DBM policy that NCA will only be
valid within the year of issue, except
NCA for A/P which is valid one month
after its issuance. Along this line,

Exp. Summary Account to the Acc.


Surplus/Deficit account

3-01-01010
1-06-03010

1,000,0
00
1,000,0
00