These accounting tutorials, written by an accounting tutor and retired Professor of Accounting are great
learning tools that will help you understand each topic.
You should read the related chapter in your financial accounting textbook and
attempt some exercises. When you come to a stumbling
block, just click on the accounting tutorial
that covers your problem area.
They are easy to use. Each accounting tutorial
shows you step by step how to get through a typical
problem. All you have to do is click your mouse and you
move through the tutorial. Go through them as fast or as
slow as you want. You are in control.
THE ACCOUNTING CYCLE
The accounting cycle includes analyzing, recording and
posting transactions, preparing a trial balance, making
adjusting entries and preparing closing entries. Before
you can record a transaction, you must have an idea of
how we increase and decrease the accounts. We start out
format. After a few tutorials (one or two
chapters in your book), you will never use that format
again. It is a learning tool. Click on the Tabular tutorial and get started.
After you have completed the Tabular Tutorial,
you will have a good idea of how accounts
are increased and decreased simply with plusses and
minuses. The Normal Balances Tutorial will discuss and illustrate
normal balances of accounts and the
use of debits and credits. In this tutorial, you will be
shown the rules for debits and credits. At the
completion, you will be able to increase and decrease
accounts using debits and credits instead of plusses and
minuses. Test yourself. Take the normal balance test. It's in the menu on the right.
The recording tutorial
illustrates the steps to take to record transactions in
a general journal.
A total of six transactions are illustrated.
The Posting tutorial illustrates
the steps to take to post transactions from a general
journal into the general ledger.
The adjusting entries tutorial
illustrates six typical adjusting entries (i.e. rent, insurance
supplies and unearned revenue). Your book covers
the same ones. This tutorial takes you step by step
through the process of analyzing the information given
and making the entry for each situation.
Click on the terms for the accounting cycle to make sure you are acquainted with all the terms.
Then challenge yourself. Take the accounting cycle terminology test. See if you are
ready for your class quiz or test. Go ahead. Click on it. No one will know the results but you.
Frequently Asked Questions
Q. How can I determine which accounts to debit and credit for an entry?
A. There are five questions you can ask and answer:
- What accounts are changing because of this transaction?
- What is the classification of each account?
- What is the normal balance of each account?
- Is the account increasing or decreasing?
- Is the account to be debited or credited?
Answer those questions and apply the rules of debits and credits for increasing/decreasing
accounts and you will have the answer. This is illustrated in the Recording tutorial.
Q. What is a trial balance?
A. You recorded transactions in the general journal with equal debits and credits.
You posted those entries into the accounts. You had equal debits and credits in the journal
so you must have equal debits and credits in the general ledger. The trial balance is a
listing of all the accounts in the ledger with balances other than zero. The trial balance
should have equal debits and credits proving that you posted equal debits and credits.
Q. Why are adjustments necessary?
A. It's a timing thing. Financial statements are prepared
at the end of period and in your course always at the end of a month.
During the accounting period, transactions were recorded, many times
creating assets. At the end of the period, we may not have the assets
that are stated in our accounts. Corporations report to the public
so they must change the accounts to properly state them. For instance,
we increased the supplies account by making purchases during the
period. We've used some of those supplies so we need to show how
much. We reduce the supplies to the amount we have and at the same
time show the amount we used.
Q. What happens if an adjustment isn't made?
A. Assume the adjustment to recognize the use of $1,000 of supplies was not made.
The Supplies account was not reduced by the $1,000 so that asset is too high (it's overstated).
If assets are overstated in the accounting equation, then something else has to be happening to
make our equation balance. We failed to increase our expense account which would have reduced
our net income and therefore, owner's equity. So owner's equity is overstated by the $1,000.
ASSETS = LIABILITIES + OWNER'S EQUITY