1. Complete All Steps In The Accounting Cycle
Principles of Cost Analysis and Management

2. Lacy’s Statement of Financial Position
Assets:
Liabilities & Financial Position:
Cash $130 Other Assets 79 Total: $209
Liabilities: $ 3
Financial Position: 206
Total: $209
Financial Position
Why doesn’t the Ledger Account agree with the Statement of Financial Position?
(-)
(+)
200

3. Terminal Learning Objective
Task: Complete All Steps In The Accounting Cycle For A Time Period
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: with at least 80% accuracy (70% for international students) you must:
Describe the purpose of closing transactions
Record closing transactions in tabular format

4. Post-Closing Trial Balance
The Accounting Cycle
Record Transactions
Post-Closing Trial Balance
Post to Ledger
Close Accounts
Prepare Trial Balance
Prepare
Statements
Adjust Accounts
Adjusted
Trial Balance

5. 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

6. 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.

7. Transferring to Financial Position
Revenues
Financial
Position
Expenses

8. LSA #1 Check on Learning Q1. What are the two purposes for closing
transactions?
A1.
Q1. What are the two purposes for closing
transactions?
A1.
To zero out the revenue and expense accounts.
Make the ledger balance for financial position agree with the Statement of Financial Position

9. LSA #1 Summary
During this block, we discussed why closing out the revenue and expense accounts are necessary in order to make the Post Close Trial Balance reconcile with it’s Debits and Credits.

10. Lacy’s Ledger Cash Other Assets Liabilities (+) 200 15 5 50
130
(-) 20 10 5 65 40
(+) 20 65 40 79
(-) 5 60 1
(-) 40
(+) 40 3
Financial Position
Revenues
Expenses
(-)
(+)
200 85
(-) 85
(+) 15 20 50 85
(+) 10 5 60 1 3 79
(-)

11. Lacy’s Ledger (Cont.) Cash Other Assets Liabilities (+) 200 15 5 50
130
(-) 20 10 5 65 40
(+) 20 65 40 79
(-) 5 60 1
(-) 40
(+) 40 3
Financial Position
Revenues
Expenses
(-) 79
(+)
200 85
(-) 85
(+) 15 20 50 85
(+) 10 5 60 1 3 79
(-) 79

12. Lacy’s Ledger (Cont.) Cash Other Assets Liabilities (+) 200 15 5 50
130
(-) 20 10 5 65 40
(+) 20 65 40 79
(-) 5 60 1
(-) 40
(+) 40 3
Financial Position
Revenues
Expenses
(-) 79
(+)
200 85
206
(-) 85
(+) 15 20 50 85
(+) 10 5 60 1 3 79
(-) 79

13. Recording Closing Transactions
Transaction Description
Cash +
Other Assets =
Liab
Financial Position
Rev –
Exp
Balance Forward
130 79 3
200 85 -
Close Revenues
+85
-85
New Balance
285
Close Expenses
-79
206
Transaction Description
Cash +
Other Assets =
Liab
Financial Position
Rev –
Exp
Balance Forward
130 79 3
200 85 -
Close Revenues
New Balance
Close Expenses
209
209

14. 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.

15. Lacy‘s Post-Closing Trial Balance
Account Title
dr.
cr.
 Cash
$130 
 Other Assets
79 
 Liabilities
$ 3
 Financial Position
206
Totals
 $209
$209 

16. Accounting Cycle Spreadsheet
Statement of Activity shows ending balance in Financial Position
Lacy’s

17. Accounting Cycle Spreadsheet (Cont.)
Total Assets
equal
Total Liabilities and Equity
Lacy’s

18. Accounting Cycle Spreadsheet (Cont.)
After Closing, the Revenue and Expense accounts have zero balances

19. Accounting Cycle Spreadsheet (Cont.)
After Closing, the Financial Position balance agrees with the Statement of Activities

20. Accounting Cycle Spreadsheet (Cont.)
The Post-closing Trial Balance includes only Assets, Liabilities and Financial Position

21. LSA #2 Check on Learning
Q1. When the Expense account is closed, what is the effect on the Financial Position account?
A1.
Q2. What accounts should be included on the Post-Closing Trial Balance?
A2.
Q1. When the Expense account is closed, what is the effect on the Financial Position account?
A1. It is Decreased
Q2. What accounts should be included on the Post-Closing Trial Balance?
A2. Assets, Liabilities, Financial Position

22. LSA #2 Summary
During this lesson, we discussed the purposes for closing transactions within the accounting cycle, and then recorded the closures in tabular format. Formulas were then used for computation.

23. Practical Exercise

24. TLO Summary
Task: Complete All Steps In The Accounting Cycle For A Time Period
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: with at least 80% accuracy (70% for international students) you must:
Describe the purpose of closing transactions
Record closing transactions in tabular format