Lecture Principles of accounting (2005): Chapter 4 - Completing the accounting cycle. This chapter focuses on the preparation of closing entries and the completion of the accounting cycle. A discussion of the work sheet concludes the chapter. | Completing the Accounting Cycle Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 4 Learning Objectives State all the steps in the accounting cycle. Explain and prepare closing entries. Prepare the post-closing trial balance. Prepare reversing entries as appropriate. Prepare and use a work sheet. Overview of the Accounting Cycle Objective 1 State all the steps in the accounting cycle The Accounting Cycle A series of steps in the accounting system Purpose Measure business activities in the form of transactions Transform these transactions into financial statements Communicate useful information to decision makers Steps in the Accounting Cycle business transactions from source documents the entries in the journal the entries to the ledger and prepare a trial balance the accounts and prepare an adjusted trial balance the accounts and prepare a post-closing trial balance financial statements Analyze Record Post Adjust Close Prepare The order of these steps . | Completing the Accounting Cycle Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 4 Learning Objectives State all the steps in the accounting cycle. Explain and prepare closing entries. Prepare the post-closing trial balance. Prepare reversing entries as appropriate. Prepare and use a work sheet. Overview of the Accounting Cycle Objective 1 State all the steps in the accounting cycle The Accounting Cycle A series of steps in the accounting system Purpose Measure business activities in the form of transactions Transform these transactions into financial statements Communicate useful information to decision makers Steps in the Accounting Cycle business transactions from source documents the entries in the journal the entries to the ledger and prepare a trial balance the accounts and prepare an adjusted trial balance the accounts and prepare a post-closing trial balance financial statements Analyze Record Post Adjust Close Prepare The order of these steps can vary depending on the system in place Step 6 may be completed before Step 5 Overview of the Accounting Cycle Input Output Accounting System Discussion Is it necessary to complete all six steps in the accounting cycle? Yes. All six steps must be accomplished to complete the accounting cycle. However, the order of these steps can vary somewhat depending on the system in place Closing Entries Objective 2 Explain and prepare closing entries Two Account Types Permanent accounts Balance sheet accounts Also called real accounts Carry end-of-period balances into the next accounting period Temporary accounts Income statement accounts (revenues and expenses) Also called nominal accounts Begin each accounting period with a zero balance Closing Entries Journal entries made at the end of an accounting period Two purposes Clear revenue, expense, and Withdrawal accounts (temporary accounts) of their balances Summarize a period's revenues and expenses Revenue and expense accounts must begin each .
