In this exercise, you are asked to identify and define the types/characteristics of recurring or year-end adjusting entries that are applicable and suitable for reversing entries. In business, many accounting entries are recorded to (or captured directly by) the accounting system each day. Some of these entries will be repeating because of the nature of the events, such as paying wages, paying utility bills, etc. These entries are called “recurring” entries. In the accounting cycle, accountants record fiscal year-end adjusting entries (FYE) before they prepare for the financial statements. Many of these FYEs are relate to some of the recurring entries previously described, such as accrued wages expense, accrued utility expense, etc. Go through Step 2 below thoroughly and carefully if you are not familiar with different types of FYEs. A very last step in the accounting cycle is the reversing entries which is optional. That means accountants have the choice to adopt it or not. Go through Step 1 below thoroughly and carefully if you are not familiar with the reversing entry concept. This exercise requires you to identify recurring entries and FYEs relate to 8 out of 10 most commonly involved accounts in the year-end procedure. System Understanding Aid case covers some of them. Intermediate Accounting I and II courses cover them all. You can go back to these sources if you need to refresh your memory. In this exercise, you are going to find that some of these entries, recurring or FYEs, are applicable to the reversing entries and others are not, after you follow through Step 1 and 2 below. Your task in this exercise is to discover/define the reasons causing this difference. Try to make sure the accuracy of your entries in Step 1 and 2 before you move on to Step 3. One of the results from your analysis may include this: reversing entries should be adopted to recurring entries and/or FYEs with xxxxxx (i.e., certain characteristics) because xxxxxx. Reversing entries should NOT be adopted to recurring entries and/or FYEs with xxxxxx (i.e., certain characteristics) because xxxxxx. Requirements: Please follow three steps below and turn in the following items: 1. (20 points) A business memo addressing to me about your finding (i.e., types/characteristics of year-end adjusting entries that are applicable and suitable for reversing entries). Please follow the memo writing rubric, 2. (10 points) Your work in Table I, 3. (20 points) Diagrams that you come up with to support your work in Table I (you can use those that I have created below, but please use different dates and figures), 4. (10 points) Your work in Table III, and 5. Feedback sheet 6. Save the file using your name and the name of the assignment, e.g., Wang-TJ-AC.doc, and them submit it to me.
Attachments:
AccountingCyc….doc
