Read the following instructions thoroughly before beginning
your work. This will help you to become familiar with what
is involved in the project. Some students start on the project
right away, thinking they’ll save time. Those students tend to
get stuck and spend more time working through the project
than is necessary. The material you need to know in order
to complete the project has been covered in the textbook and
the assigned exercises and problems. If you understand the
chapters and completed the assigned homework problems,
you should have no problem with the project.
The project is to be done by hand with a pencil and paper.
Use the blank forms provided. At the end of the project, you’ll
be given instructions for creating and uploading the financial
statements in a Word or Excel file for grading.
Note: The formatting of financial statements is important.
They follow Generally Accepted Accounting Principles (GAAP),
which creates a uniformity of financial statements for analyzing. This allows for an easier comparison, as all businesses
follow GAAP. Therefore, the financial statements should be
created exactly the same way shown or referenced in the textbook. Failure to do so will result in a loss of points.
The project references “debits equaling credits.” This is a
fundamental principle of accounting that mustn’t be violated.
Doing so is not acceptable under any circumstance. Debits not
equaling credits allows for “cooking of the books,” which is
presenting false information. It also allows for embezzlement,
which is theft by management or employees. If debits don’t
equal credits, the cause may be a lack of understanding of
accounting principles, such as those presented in the textbook and assigned homework problems, or a lack of focus
and concentration when making journal entries, posting to
ledger accounts, or completing math. Remember—instructors
are available to help you with material you may be struggling
with. Mistakes of the lack-of-focus variety are best corrected
by going back over the work until the error is found.
The accounting equation must balance on the balance sheet.
This is another fundamental principle of accounting that
can’t be violated and if so is completely unacceptable. When
the equation doesn’t balance and the numbers are “fudged,”
this is easily detectable by someone who knows accounting. If
your debits equal your credits and you understand which
general ledger accounts belong on which financial statements, then the accounting equation should balance. It’s
really all about understanding the concepts and applying
The following financial statements are provided from the prior
accounting period for J & L Accounting, Inc.:
a) Post-closing trial balance
b) Balance sheet
c) Income statement
d) Statement of retained earnings