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BUS 251Ch 3

Closing the books, the whole cycle.

Eight short steps on one small company: the accounting cycle, from the adjusted trial balance to the statements, the classified statement of financial position, closing entries through Income Summary and the post-closing trial balance. Then practise with worked solutions.

Part 1 · The cycle · Step 1 of 8

The accounting cycle runs in the same order every period

Set-up and opening
During the period, for every transaction
At the end of the period
Every period, the same steps turn business events into financial statements. Steps 3 to 6 repeat for every transaction; the rest happen at the start or the end of the period. The book's cycle ends with closing entries, and a post-closing trial balance is the final check.
Try it: Walk through the cycle, or tap any step. Notice that adjusting entries come before the statements and closing entries come after them.
Step1 of 12
Chart of accountsPost-closing TB
Step
1 of 12
When
Set-up
Produces
Account list
Chart of accounts. A numbered list of every account the company uses, in statement order: assets, liabilities, equity, revenues, expenses. Set up once, then added to as the business changes.
During the period: steps 3 to 6
Analysing, journalizing and posting happen again and again, all period long.
At the end: trial balance → adjusting entries → adjusted trial balance → statements → closing entries
The statements are built from the adjusted trial balance, before closing wipes the revenue and expense balances.
Then the cycle starts again
Only permanent accounts carry forward, so the new period starts with revenues and expenses at zero.
Practise

Practise like it is the midterm

Answer first, then check. Fresh numbers writes a new question of the same type every time, so you can drill closing entries until they are automatic.

Score
0 / 0
Accounting cycleQuestion 1 of 18
In the accounting cycle, which step comes right after preparing the adjusted trial balance?

Midterm coming up and journal entries still feel shaky?

Bring your practice problems. We work through them together until every type feels routine.

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