Part 1: Questions I am having trouble answering. I have not yet grasp the implications for this subject. Can you please help me?
1) Why are adjusting entries necessary?
2) The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and explain why both are necessary.
3) What is the purpose of closing entries?
4) What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
Part 2: For each of the following items, indicate whether it would be classified and reported under the operating activities (OA), investing activities (IA), or financing activities (FA) section of a statement of cash flows:
a. Cash receipts from selling merchandise
b. Cash payments for wages and salaries
c. Cash proceeds from sale of stock
d. Cash purchase of equipment
e. Cash dividends paid
f. Cash received from bank loan
g. Cash payments for inventory
h. Cash receipts from services rendered
i. Cash payments for taxes
j. Cash proceeds from sale of property no longer needed as expansion site