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The Accounting Cycle
Completed
Adjusting, Closing, and Post-Closing Trial Balance
THE BIG PICTURE
5
Y
ou are planning your school schedule for next
term. Your goal is to take a full course load and
find a part-time job to help pay your school expenses.
You hear through your academic advisor that the
school needs to hire someone to help process
invoices in the business office a couple of afternoons
each week.
You speak with Diane Lemke, the business office
manager, about the job. Diane tells you that your work
will consist of matching purchase orders with paid
invoices and the cheques issued for payment. She also
tells you that these last few steps in the process of
paying bills is important for the proper operation of the
school’s business office. “It’s essential that this work is
done before we can close our books each month,”
Diane tells you. You believe you’ll like the work, and
you’re happy you can work your school schedule
around the hours you’re needed at the business office.
In Chapter 4, we learned about using the work-
sheet as a tool in the accounting cycle to adjust vari-
ous balances and to prepare the financial statements.
In this chapter, we focus on journalizing and posting
adjusting and closing entries. We will also discuss
preparing a post-closing trial balance, which is the
last step in the accounting cycle.
Like working in your school’s business office, the
last three steps in the accounting cycle are essential
and must be done to prepare a company’s books for
the next accounting cycle. It’s the only way an
accountant can begin a new accounting cycle or the
business office can prepare itself for a new month of
expenses.
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