Week 6- ACCT1101

• Complete Accounting Cycle

  1. Analyze Transactions

  2. Journalize Transactions

  3. Post to Ledger Accounts

  4. Prepare Trial Balance

  5. Make Adjusting Entries

  6. Prepare Adjusted Trial Balance

  7. Prepare Financial Statements

  8. Close Temporary Accounts

  9. Prepare Post-Closing Trial Balance

  10. Reversing Entries (Optional)
• Temporary Ledger Accounts

  Accounts, such as revenue and expense accounts, that are closed at the end of an accounting period to reset their balances to zero
• Recording Adjusting Entries from the Worksheet

  1. Adjusting entries are typically recorded in the general journal and posted to the ledger accounts

  2. The worksheet provides a summary of adjustments needed, including adjusting entries for accruals, deferrals, depreciation, and other items

  3. Adjusting entries are recorded with the appropriate date, accounts affected, and amounts
• Closing Process and Preparation of Post-Closing Trial Balance

  1. Transfer balances from temporary accounts (revenue, expense, and dividends) to the retained earnings (or equity) account

  2. Closing entries debit revenue accounts and credit expense accounts, resulting in a net income (or loss), which is then transferred to the retained earnings (or equity) account

  3. The balance in the retained earnings (or equity) account is transferred to the post-closing trial balance to ensure that only permanent account balances are reported
• Reversing Entries


  Optional entries made at the beginning of the next accounting period to reverse adjusting entries made in the previous period
• Equity Accounts for Partnerships


  • Capital accounts for each partner
  • Drawings accounts
  • Current year's income or loss account
• Equity Accounts for Companies


  • Common stock
  • Additional paid-in capital
  • Retained earnings (or accumulated other comprehensive income)
  • Dividends