Accounting Completing and Closing the Accounting Cycle

closing the accounting cycle

Completing the Accounting Cycle


  1. Start with beginning account balances
  2. Journalize transactions as they occur
  3. Post to the accounts (T account)
  4. Compute the unadjusted balance in each account (sum of balance of accounts)
  5. Enter trial balance on worksheet. Journalize and post adjusting entries
  6. Prepare financial statements (income statement, retained earnings, balance sheet)
    1. Income statement- revenues minus expenses
    2. Retained earnings- Net income – dividends
    3. Balance sheet- Assets = liabilities + equity
    4. Journalize and post closing entries
    5. Prepare post-closing trial balance



closing the accounting cycle

closing the accounting cycle


During the accounting period:

  • Journalizing transactions and posting to accounts

End of accounting period

  • Adjusting accounts, preparing financial statements, closing accounts


Journalize transactions






T charts with balances


End of accounting period


Trial Balance

Debits and credits add up


Adjusting Entries

Journalize and post to Ledger Adjusting Transactions


Adjusted Trial Balance


Includes columns for adjusting debits and credits


Financial Statements


Closing Entries

Transfer balances from temporary accounts and revenues from income statement to equity


Post closing Trial Balance




Worksheet- document with several columns




Column 1: Accounts

Column 2: Trial Balance and credit and debit balance at bottom

Column 3: Adjustments and total balance at bottom

Column 4: Adjusted Trial Balance with new total credit and debit balance at bottom

Column 5: Income Statement

  • Revenues and expenses
  • Net income + in debit, Net Income – in credit

Column 6: Balance sheet

Net income  + in credit, Net Income – in debit





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