@/Arpro Solutions “The Accounting Cycle”

1. Arpro Solutions, LLC Step-by-step, Reporting the financial results with @/Arpro®! Florida, U.S. @/Arpro® Solutions “The Accounting Cycle” “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

2. Accounting Cycle Process by which accountants prepare financial statements for a company, for a specific period. Journalize Transactions Post to Accounts @/Arpro® Adjust Accounts Prepare Financial Statements Closing Movements “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

3. Journalize Transactions The process of keeping a record of all your business dealings & tracking them in chronological order. Generally includes the date, the account you're debiting or crediting and a brief description of the transaction that occurred. @/Arpro® “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

4. Recording a business transaction Analyze the financial event- Identify the affected accounts- Classify the affected accounts- Determine the amount of increase or decrease for each account Apply the rules of debit and credit- Which account is debit? For what amount?- Which account is credit? For what amount? Make the entry balanced in T-account form(@/Arpro® uses this standard and helps the user) The general journal form is automatically registered(it needs only to be confirmed) “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

5. Post to Accounts After journal entries are made, the next step in the accounting cycle is to post the journal entries into the ledger. Posting refers to the process of transferring entries in the journal into the accounts in the ledger. Posting to the ledger is the classifying phase of accounting. After all accounts are posted, we can now derive the balances of each account. Provided by Arpro Solutions, LLC

6. @/Arpro® performs automated posting processes! Provided by Arpro Solutions, LLC

7. Adjust Accounts Account adjustments are entries that are made in the general journal at the end of an accounting period to bring account balances up-to-date. Unlike entries made to the general journal that are a result of business transactions, account adjustments are a result of internal events. • 5 types of adjusting entries: • Accrued revenues • Accrued expenses • Deferred revenues • Prepaid expenses • Depreciation expenses Adjusting entries are necessary because a single transaction may affect revenues or expenses in more than one accounting period and because all transactions have not necessarily been documented during the period. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

8. Closing Movements The closing process gets the temporary accounts ready for the next accounting period. Close means to make the balance zero! Close Expense accounts Close Revenue accounts Close Income Summary account Close Dividend accounts “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

9. Adjusted Trial Company Balance Look at the example of the balance from where we journalize transactions, relative to the closing movements. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

10. Close Expense accounts The expense accounts have debit balances, so to get rid of their balances we will do the opposite or credit the accounts. The total debit to income summary (“Profit and Loss” account) should match total expenses from the income statement. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

11. Close Revenue accounts We see from the trial balance that our revenue accounts have a credit balance. To make them zero we want to decrease the balance, doing the opposite. We will debit the revenue accounts and credit the Income Summary account. Close Income Summary account At this point, we have closed the revenue and expense accounts into an income summary. The balance in the income summary now represents $37,100 credit – $28,010 debit or a $9,090 credit balance. Provided by Arpro Solutions, LLC

12. We want to remove this credit balance by debiting the “income summary”. If expenses were greater than revenue, we would have a net loss. A net loss would decrease retained earnings so we would do the opposite in this journal entry by debiting the “retained earnings” and crediting the “income summary”. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

13. Close Dividends (or withdrawals) account After we add net income (or subtract net loss) on the statement of retained earnings (“Profit for the year” account), we subtract any dividends to get the ending retained earnings. We want to decrease retained earnings (debit) and remove the balance in dividends (credit) for the amount of the dividends. What we know about, in general …? “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

14. @/Arpro® @/Arpro® through the “Balance Sheets” form, automatically generates these movements facilitating the operator in writing the closing movements. The program also creates closing movements relating to "Closing Customer Accounts" and "Closing Suppliers Accounts“, relative to payments still pending. All these movements can be modified or regenerated to meet the desired accounting criteria! “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

15. Prepare Financial Statements • The final Trial Balance after closing will display only permanent, balance sheet accounts. • The Retained Earning in this balance is the ending retained earnings for the period and includes the effects of all revenues, expenses and dividends for the period. • List of permanent accounts and their balances after posting closing entries. • Total debits and credits must be equal. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC

16. Presented by Zeno Buso Managing Consultant Arpro Solutions, LLCwww.arpro-solutions.com www.business-management-software.com www.simpleaccountingprogram.com www.arpro.it Contact Info: Paolo Bertuzzo Arpro Solutions, LLC sales2@arpro-solutions.com Phone: (407) 818-0644, (407) 534-4994 Thank you for attending our workshop. The information in this document is subject to change without notice and should not be construed as a commitment by Arpro Solutions, LLC. Arpro Solutions, LLC is not responsible for errors or damages of any kind resulting from access and use to this documentation. “The way Intellectually FUN people like to learn!” Provided by Arpro Solutions, LLC