Slides complete all steps in the accounting cycle

Lacy’s Statement of Financial PositionFinancial Position- + 200 Why doesn’t the Ledger Account agree with the Statement of Financial Position?. Why doesn’t the Ledger Account agree with

Complete All Steps In The

Accounting Cycle

Principles of Cost Analysis and

Management

Lacy’s Statement of Financial Position

Financial Position(-) (+)

200

Why doesn’t the Ledger Account agree with the Statement of Financial Position?

Why doesn’t the Ledger Account agree with the Statement of Financial Position?

Terminal Learning Objective

• Task: Complete All Steps In The Accounting Cycle For

A Time Period

• Condition: You are a cost advisor technician with

access to all regulations/course handouts, and

awareness of Operational Environment

(OE)/Contemporary Operational Environment (COE) variables and actors.

• Standard: with at least 80% accuracy:

• Describe the purpose of closing transactions

• Record closing transactions in tabular format

The Accounting Cycle

Record Transactions

Post to Ledger

Prepare Trial Balance

Adjust Accounts

Adjusted Trial Balance

Purpose of Closing Transactions

• Zero out the Revenue and Expense accounts

• Allows them to start the new period with a clean slate

• Transfer revenue and expense information to the Financial Position account

• Ending balance in Financial Position ledger

account will agree with Statement of Financial

Position

Zeroing the Accounts

If I want to know how

much rain falls in the

next 24 hours, I must

empty the rain gauge

of all rain collected in

the past.

Reve nues

Finan cial Posi tion Expe nses

Transferring to Financial Position

Check on Learning

• What are the two purposes for closing

transactions?

-85

(+)152050 -

85

(-) (+)

20085

Expenses(+)

1056013 -

(-)

Liabilities(-)

40 -

(+)403 -

3

Other Assets(+)

20652040 -

79

(-)5601 -

-85

(+)152050 -

85

(-)

79

(+)20085

Expenses(+)

1056013 -

(-)

-Liabilities(-)

40 -

(+)403 -

3

Other Assets(+)

20652040 -

79

(-)5601 -

-130

(-)201056540 -

(-)

-85

(+)152050 -

206

Expenses(+)

1056013 -

(-)

-Liabilities(-)

40 -

(+)403 -

3

Other Assets(+)

20652040 -

79

(-)5601 -

Recording Closing Transactions

Transaction

Description Cash + Other Assets = Liab + Financial Position + Rev – Exp

Balance Forward 130 + 79 = 3 + 200 + 85 - 79Close Revenues

New Balance

Close Expenses

New Balance

Recording Closing Transactions

Recording Closing Transactions

Post-Closing Trial Balance

• The post-closing or after-closing trial balance

is a list of all of the accounts and their

balances, omitting the accounts with a zero

balance

• Therefore, there will be no revenues or

expenses on the post-closing trial balance,

because the balance in each of those accounts

is zero after the closing process

Check on Learning

• When the Expense account is closed, what is the effect on the Financial Position account?

• What accounts should be included on the

Post-Closing Trial Balance?

Accounting Cycle Spreadsheet

Statement of Activity shows ending balance in Financial Position

Statement of Activity shows ending balance in Financial Position

Lacy’s

Accounting Cycle Spreadsheet

Accounting Cycle Spreadsheet

After Closing, the Revenue and Expense accounts have zero balances

After Closing, the Revenue and Expense accounts have zero balances

Accounting Cycle Spreadsheet

After Closing, the Financial Position balance agrees with the Statement of Activities

After Closing, the Financial Position balance agrees with the Statement of Activities

Accounting Cycle Spreadsheet

The Post-closing Trial Balance includes only Assets, Liabilities and Financial Position

The Post-closing Trial Balance includes only Assets, Liabilities and Financial Position

Practical Exercise