• Unit 4: Completing the Accounting Cycle

    So far, you've learned how to process the raw data of the transactions that happen in a business entity into useable information in the form of the financial statements. This unit will explain how to review and summarize the accounting cycle and prepare the income statement, the statement of retained earnings, and the balance sheet. You will also see how to use an accounting worksheet to organize your work, prepare adjusting entries, and complete a post-closing trial balance.

    Completing this unit should take you approximately 3 hours.

    • Upon successful completion of this unit, you will be able to:

      • discuss and demonstrate the use of the accounting worksheet as a means of preparing the financial statements; and
      • explain and execute the closing process for the accounting cycle.

    • 4.1: Completing the Accounting Cycle

      • Completing the Accounting Cycle File

        Read and take notes on sections 5.1-5.11 on pages 190-231.

        • Section 5.3 summarizes what we've learned so far and introduces the accounting worksheet. 
        • Section 5.4 discusses the accounting worksheet step-by-step using the example of the MicroTrain company.
        • Section 5.5 shows a worksheet that you can use to create your financial statements. 
        • Section 5.6 explains how the accounting worksheet can be your source for making the adjusting entries. The worksheet is an informal document that supports the analysis of the accounting information; it is not a part of the formal accounting process. Some people prefer to use the worksheet, and you should learn the basics of it. As you become more comfortable, you can decide whether or not to use it. 
        • Section 5.7 discusses the nominal account, which describes a temporary account. When you take your snapshot of a specific accounting period, you need to address the nominal accounts.
        • Section 5.8 analyzes how technology has affected financial accounting.
        • Section 5.9 compares balance sheets and classified balance sheets.
        • Section 5.10 discusses and the current ratio, which is a firm's ability to pay off its current liabilities with its current assets. A basic standard suggests that a business should maintain a 2-to-1 ratio to meet its financial obligations. However, there are many variables that determine what is best in a given situation.
        • Section 5.11 summarizes the chapter and offers a self-test. The solutions to the self-test are on pages 250 and 251.
      • What is a 10-Column Worksheet in Accounting? URL

        This article gives links to specific accounting information that is used to complete the accounting worksheet.

    • 4.2: The Closing Process

      • Adjusting and Closing Entries Page

        You have already watched the first three videos here, but review them now and then watch the final two videos, which discuss using the perpetual method, the closing cycle, and the preparation of financial statements.

    • Unit 4 Assessment

      • Unit 4 Assessment Quiz
        Receive a grade

        Take this assessment to see how well you understood this unit.

        • This assessment does not count towards your grade. It is just for practice!
        • You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
        • You can take this assessment as many times as you want, whenever you want.