The Matching Concept
and the Adjusting
Process
6542– SRI HANDAYANI, SE, MM, MAk, CPMA
PROGRAM STUDI MANAJEMEN & AKUNTANSI FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS ESA UNGGUL
FEB103
PENGANTAR
AKUNTANSI I +
LAB
Mahasiswa mampu melakukan
pencatatan berdasarkan konsep
penandingan (
Matching concept
) dan
proses penyesuaian dalam akuntansi
TKT306 - Perancangan Tata Letak Fasilitas 6623 - Taufqur Rachman 2
Chapter
3
The Matching Concept
and the Adjusting
Process
Accounting,
21
stEdition
Warren Reeve Fess
PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting Pepperdine University
© Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved.
Chapter
4
Completing the
Accounting Cycle
Financial and Managerial Accounting
8th Edition
Warren Reeve Fess
PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting Pepperdine University
© Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved.
Task Force Image Gallery clip art included in this electronic presentation is used with the
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1.
Review the seven basic steps of the
accounting cycle.
2.
Prepare a work sheet.
3.
Prepare fnancial statements from a
work sheet.
4.
Prepare adjusting and closing entries
from a work sheet.
5.
Explain what is meant by the fscal year
and the natural business year.
6.
Analyze and interpret the fnancial
solvency of a business by computing
working capital and the current ratio.
Objectives
Objectives
After studying this
chapter, you should
be able to:
After studying this
chapter, you should
Seven Basic Steps of the
Accounting Cycle
Seven Basic Steps of the
Accounting Cycle
1.
Transactions are analyzed and recorded in the
journal.
2.
Transactions are posted to the ledger.
3.
A trial balance is prepared, adjustment data are
assembled, and an optional work sheet is completed.
4.
Financial statements are prepared.
5.
Adjusting entries are journalized and posted.
6.
Closing entries are journalized and posted.
Assets are commonly divided into classes
and that two of these classes are current
assets and property, plant, and equipment.
Assets are commonly divided into classes
That’s correct. Cash and other
assets that are expected to be
converted into cash, sold, or used
up usually in less than a year are
current assets.
That’s correct. Cash and other
assets that are expected to be
converted into cash, sold, or used
For example?
For example?
Well… besides cash, there’s
notes receivable, accounts
receivable, supplies, and other
prepaid items.
Well… besides cash, there’s
notes receivable, accounts
receivable, supplies, and other
So, assets that have a life
over a year are listed under
property, plant, and
equipment.
So, assets that have a life
over a year are listed under
property, plant, and
equipment.
There are some exceptions, but
that’s basically correct. Assets such
as office equipment, machinery,
buildings, and land would appear
under that heading.
There are some exceptions, but
that’s basically correct. Assets such
as office equipment, machinery,
buildings, and land would appear
Liabilities due usually within one
year or less and that are to be paid
out of current assets are called
current liabilities.
Liabilities due usually within one
year or less and that are to be paid
out of current assets are called
current liabilities.
Ö
Accounts payable
Ö
Wages payable
Liabilities not due for
more than a year usually
are
long-term liabilities.
Liabilities not due for
more than a year usually
are
long-term liabilities.
Mortgage note
payable
The work sheet is a useful device
for understanding the flow of
accounting data from the
unadjusted trial balance to the
financial statements.
The work sheet is a useful device
for understanding the flow of
accounting data from the
unadjusted trial balance to the
The Work Sheet
Trial Balance
Accounts
Dr
Cr
Dr
Cr
Dr
Cr
Adjustments
Adjusted TB
Prepared from the general ledger.
Accounts are listed in the following
order: assets, liabilities,
stockholders’ equity, revenues, and
expenses.
Prepared from the general ledger.
Accounts are listed in the following
order: assets, liabilities,
Adjustments are entered here. Two
possibilities:
1. Deferrals – Existing balances are
changed.
2. Accruals – New information is
entered.
Adjustments are entered here. Two
possibilities:
1. Deferrals – Existing balances are
changed.
2. Accruals – New information is
entered.
Trial Balance
Accounts
Dr
Cr
Dr
Cr
Dr
Cr
The Work Sheet
Adjustments are combined with
the trial balance. Account
balances are now adjusted.
Adjustments are combined with
the trial balance. Account
balances are now adjusted.
Trial Balance
Accounts
Dr
Cr
Dr
Cr
Dr
Cr
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000
Prepaid Insurance 2,400
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
The Unadjusted
Trial Balance
(a) The
Supplies
account has a debit of
$2,000. A count of supplies at the end of
the period reveals that $760 is on hand.
Therefore, $1,240 in supplies was used
during the two-month period.
(a) The
Supplies
account has a debit of
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000
Prepaid Insurance 2,400
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
(b)The
Prepaid Insurance
account has a
debit balance of $2,400, which
represents prepayment of insurance for
24 months beginning December 1.
Thus, the insurance expense for this
month is $100 ($2,400 ÷ 24).
(b)The
Prepaid Insurance
account has a
debit balance of $2,400, which
represents prepayment of insurance for
24 months beginning December 1.
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
1
Accounts are added as needed.
(c) The
Unearned Rent
account has a credit
balance of $360, which represents the
receipt of three-months’ rent beginning
with December 1. Thus, the rent revenue
for December is $120.
(c) The
Unearned Rent
account has a credit
balance of $360, which represents the
receipt of three-months’ rent beginning
with December 1. Thus, the rent revenue
for December is $120.
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
(d) Wages accrued but not paid at
the end of December total $250.
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
(e) Fees accrued at the end of
December, but not recorded, total
$500.
(e) Fees accrued at the end of
Cash 2,065
Accounts Receivable 2,220
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340
Wages Expense 4,275 (d) 250
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
(f) Depreciation of the office
equipment is $50 for December.
(f) Depreciation of the office
Cash 2,065
Accounts Receivable 2,220 (e) 500
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340 (e) 500
Wages Expense 4,275 (d) 250
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
Cash 2,065
Accounts Receivable 2,220 (e) 500
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340 (e) 500
Wages Expense 4,275 (d) 250
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Trial Balance Adjustments Trial Balance
NetSolutions
Work Sheet
For the Two Months Ended December 31, 2005
1
To make more space,
let’s remove the
heading.
To make more space,
let’s remove the
Cash 2,065
Accounts Receivable 2,220 (e) 500
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340 (e) 500
Wages Expense 4,275 (d) 250
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Next, the unadjusted Trial
Balance columns and the
Adjustments columns are
combined to determine the
amounts displayed in the
Adjusted Trial Balance.
Next, the unadjusted Trial
Balance columns and the
Adjustments columns are
combined to determine the
Cash 2,065
Accounts Receivable 2,220 (e) 500
Supplies 2,000 (a) 1,240
Prepaid Insurance 2,400 (b) 100
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 360 (c) 120
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,340 (e) 500
Wages Expense 4,275 (d) 250
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 800 (a) 1,240
Miscellaneous Expense 455
42,600 42,600
Cash 2,065 2,065
Accounts Receivable 2,220 (e) 500 2,720
Supplies 2,000 (a) 1,240 760
Prepaid Insurance 2,400 (b) 100 2,300
Land 20,000 20,000
Office Equipment 1,800 1,800
Accounts Payable 900 900
Unearned Rent 360 (c) 120 240
Capital Stock 25,000 25,000
Dividends 4,000 4,000
Fees Earned 16,340 (e) 500 16,840
Wages Expense 4,275 (d) 250 4,525
Rent Expense 1,600 1,600
Utilities Expense 985 985
Supplies Expense 800 (a) 1,240 2,040
Miscellaneous Expense 455 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Revenue and expense balances in
the Adjusted Trial Balance column
are extended to the Income
Statement column.
Revenue and expense balances in
the Adjusted Trial Balance column
are extended to the Income
Statement column.
Adjusted TB
Accounts
Dr
Cr
Dr
Cr
Dr
Cr
Asset, liability, and stockholders’
equity balances in the Adjusted
Trial Balance column are extended
to the Balance Sheet column.
Asset, liability, and stockholders’
equity balances in the Adjusted
Trial Balance column are extended
to the Balance Sheet column.
Adjusted TB
Accounts
Dr
Cr
Dr
Cr
Dr
Cr
To make room on the slides for
the Income statement and
Balance Sheet columns, the Trial
Balance and Adjustments
columns have been removed.
To make room on the slides for
the Income statement and
Balance Sheet columns, the Trial
Balance and Adjustments
Cash 2,065
Accounts Receivable 2,720
Supplies 760
Prepaid Insurance 2,300
Land 20,000
Office Equipment 1,800
Accounts Payable 900
Unearned Rent 240
Capital Stock 25,000
Dividends 4,000
Fees Earned 16,840
Wages Expense 4,525
Rent Expense 1,600
Utilities Expense 985
Supplies Expense 2,040
Miscellaneous Expense 455
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Insurance Expense 100
Rent Revenue 120
Wages Payable 250
Depreciation Expense 50
Accum. Depreciation 50
Now, let’s extend the balances
from the Adjusted Trial Balance
column.
Now, let’s extend the balances
from the Adjusted Trial Balance
Cash 2,065 2,065
Accounts Receivable 2,720 2,720
Supplies 760 760
Prepaid Insurance 2,300 2,300
Land 20,000 20,000
Office Equipment 1,800 1,800
Accounts Payable 900 900
Unearned Rent 240 240
Capital Stock 25,000 25,000
Dividends 4,000 4,000
Fees Earned 16,840 16,840
Wages Expense 4,525 4,525
Rent Expense 1,600 1,600
Utilities Expense 985 985
Supplies Expense 2,040 2,040
Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Insurance Expense 100 100
Rent Revenue 120 120
Wages Payable 250 250
Depreciation Expense 50 50
Accum. Depreciation 50 50
These four
columns are
summed.
These four
columns are
Cash 2,065 2,065
Accounts Receivable 2,720 2,720
Supplies 760 760
Prepaid Insurance 2,300 2,300
Land 20,000 20,000
Office Equipment 1,800 1,800
Accounts Payable 900 900
Unearned Rent 240 240
Capital Stock 25,000 25,000
Dividends 4,000 4,000
Fees Earned 16,840 16,840
Wages Expense 4,525 4,525
Rent Expense 1,600 1,600
Utilities Expense 985 985
Supplies Expense 2,040 2,040
Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit Adjusted
Insurance Expense 100 100
Rent Revenue 120 120
Wages Payable 250 250
Depreciation Expense 50 50
Accum. Depreciation 50 50
The difference between the
Income Statement column
totals is the net income (or net
loss) for the period.
The difference between the
Income Statement column
totals is the net income (or net
The difference between the
Balance Sheet column totals is
also the income (or net loss)
for the period.
The difference between the
Balance Sheet column totals is
9,755 16,960 33,645 26,440
7,205
7,205
16,960 16,960 33,645 33,645
Income Statement Balance Sheet
NetSolutions Income Statement
For Two Months Ended December 31, 2005
Fees earned $16,840
Rent revenue
120
Total revenues
$16,960
Expenses:
Wages expense $ 4,525
Supplies expense 2,040
Rent expense
1,600
Utilities expense
985
Insurance expense 100
Depreciation expense 50
Miscellaneous expense
455
Total expenses
9,755
Net income
$ 7,205
Every amount on this income statement was taken from the
Income Statement column of the work sheet.
NetSolutions
Retained Earnings Statement
For the Two Months Ended December 31, 2005
Net income for November and December
7,205
Less dividends 4,000
Retained earnings, December 31, 2005
$3,205
Either from the
income
statement or the
work sheet.
Either from the
income
statement or the
work sheet.
From the
Balance Sheet
debit column of
the work sheet.
From the
Balance Sheet
debit column of
NetSolutions
Balance Sheet
December 31, 2005
Assets Liabilities
Current assets: Current liabilities:
Cash
$ 2,065
Accounts payable
$900
Accounts receivable
2,720
Wages payable
250
Supplies
760
Unearned rent
240
Prepaid insurance
2,300
Total liabilities
$ 1,390
Total current assets $ 7,845
Property, plant, and
equipment:
Land
$20,000
Office equip. $1,800
Less accum.
depreciation
50 1,750
Capital stock
$25,000
Total property, plant
Retained earnings
3,205
28,205
and equipment
21,750 Total liabilities and
Total assets
$29,595
stockholders’ equity
$29,595
Assets Liabilities
Current assets: Current liabilities:
Cash
$ 2,065
Accounts payable
$900
Accounts receivable
2,720
Wages payable
250
Supplies
760
Unearned rent
240
Prepaid insurance
2,300
Total liabilities
$ 1,390
Total current assets $ 7,845
Property, plant, and
equipment:
Land
$20,000
Office equip. $1,800
Less accum.
depreciation
50 1,750
Capital stock
$25,000
Total property, plant
Retained earnings
3,205
28,205
and equipment
21,750 Total liabilities and
Adjusting and Closing Entries
Adjusting and Closing Entries
Adjusting entries are recorded
in the journal at the end of the
accounting period.
Adjusting entries are recorded
in the journal at the end of the
Adjusting and Closing Entries
Adjusting and Closing Entries
If a work sheet has been
prepared, the data for
these entries are in the
Adjustments columns.
RETAINED EARNINGS
The Closing Process
The Closing Process
Income Summary
1
Revenues are
transferred to
Income Summary
2
Expenses are
transferred to
Income Summary
3
Net Income or Net Loss is
transferred to Retained Earnings
RETAINED EARNINGS
The Closing Process
The Closing Process
Income Summary
1
Revenues are
transferred to
Income Summary
2
Expenses are
transferred to
Income Summary
3
Net Income or Net Loss is
transferred to Retained Earnings
4
Dividends are transferred to
Retained Earnings
The
Income Summary
account does not appear on
the financial statements.
The
Income Summary
Wages Expense
balances shown
are adjusted
balances before
closing. The
following
sequence
demonstrates the
closing process.
Note: The
balances shown
are adjusted
balances before
closing. The
following
sequence
demonstrates the
closing process.
Wages Expense
Debit each revenue
account for the
amount of its
balance, and credit
Income Summary
The Closing Process
The Closing Process
Wages Expense
total expenses and
credit each expense
account for its
balance.
The Closing Process
The Closing Process
Wages Expense
Summary
for the
amount of its
balance (in this
case, the net
income) and credit
Retained Earnings
.
Fees Earned
The Closing Process
The Closing Process
Wages Expense
Debit
Retained
Earnings
for the
balance of
Dividends
and
credit
Dividend
for
the same amount.
Fees Earned
The Closing Process
The Closing Process
Step 4
Wages Expense
Close Revenues
Close Expenses
Close Income Summary
Close Dividends
16,840