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Student’s Name Professor’s Name Course Date Chapter 4 Summary The Topics Covered (The WHAT) The topics covered in this chapter are four. The first topic is about the preparation of a balance sheet, income statement, and earning statement. The second topic is about closing temporary accounts which require four entries. For this process to be complete, the retained earnings account balance should agree with the reported amount that has been retained in the balance sheet and the earning statement. The third topic is the ten essential steps that should be followed during accounting cycle. To show how these steps are used practically in a business, the chapter gives an example of Kelly Consulting and their accounting for April. The fourth topic is a fiscal business year which is the annual accounting period that businesses adopt. Importance of The Topics Covered (Why They are Important) The importance of the balance is showing what a business owns and what it owes. The income statement importance is showing investors or creditors who want to partner with a business, the business performance, its profitability, and help when assessing risk. Earning statement shows what business did with its profits. The closing entries are for ensuring that every expense and revenue account of business will start the next fiscal year with zero balance (Albrecht 28). The importance of the accounting cycle is for forming consistency and uniformity, for evaluating business performance, for catching transaction errors, and for bringing about efficiency in business processes (Albrecht 29). The importance of the last topic, a fiscal business year, is that it is the period the business
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