Fundamentals of Accounting: San Juan Campus

This document provides an overview of accounting and discusses how an adjusted trial balance is used to prepare financial statements. It defines accounting as a service activity that provides quantitative financial information for economic decision making. It explains that an adjusted trial balance includes updated balances for all accounts after adjusting entries and is used as the basis for financial statements, which companies can prepare directly from the adjusted trial balance. The document also includes an example of an adjusted trial balance and assessment questions.

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Fundamentals of Accounting: San Juan Campus

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Kristel Joy Eledia Nietes

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

San Juan Campus

Fundamentals
of Accounting
Part 1
Ernie Masilang Lat II, CPA,
REB, EnP, MABE
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Overview
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Overview
What is Accounting?
Accounting is a service activity. Its function
is to provide quantitative information,
primarily financial in nature, about economic
activities that is intended to be useful in
making economic decisions.
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Objectives
After successful completion of this module, you should be able to:
• Describe the nature and purpose of an adjusted trial balance.
• Prepare financial statements
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Adjusting the Accounts

Prepare
Adjusted
financial
trial balance
statements
Adjusted
PUP Trial Balance and
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Financial Statements
After a company has journalized and posted all
adjusting entries, it prepares another trial balance
from the ledger accounts. This trial balance is called
an adjusted trial balance. It shows the balances of all
accounts, including those adjusted, at the end of the
accounting period. The purpose of an adjusted trial
balance is to prove the equality of the total debit
balances and the total credit balances in the ledger
after all adjustments. Because the accounts contain
all data needed for financial statements, the adjusted
trial balance is the primary basis for the preparation
of financial statements.
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Adjusted Trial Balance
Preparing
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Statements
Companies can prepare financial statements directly
from the adjusted trial balance.
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Assessment
The adjusted trial balance of Harmony Company includes the
following accounts at December 31, 2020: Cash P12,000,
Owner’s Capital P22,000, Owner’s Drawing P3,000, Service
Revenue P41,000, Rent Expense P900, Salaries and Wages
Expense P6,000, Supplies Expense P700, and Depreciation
Expense P1,800. Prepare an income statement for the year.
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Assessment
Ming Company was organized on April 1, 2020. The company
prepares quarterly financial statements. The adjusted trial
balance amounts at June 30 are as follows.
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Questions?
For questions and clarifications, please email me at
[email protected]. If I do not respond after three
(3) days after the email, kindly perform a follow up
email. Thank you!
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END