Question

Describe the purpose of adjusting entries, closing entries, and the post-closing trial balance. What is the most important output of the accounting cycle? What was the most difficult part of the accounting cycle for you to understand?

Answer these questions with a minimum posting of 150 words that is complete, thoughtful, and written in Standard English.

Answer 1

Adjusting entries are journal entries made at the end of an accounting cycle to update certain revenue and expense accounts and to make sure you comply with the matching principle. The matching principle states that expenses have to be matched to the accounting period in which the revenue paying for them is earned.

A closing entry is a journal entrymade at the end of an accounting period to transfer the temporary account balances to the permanent accounts. In other words, closing entries zero out or close temporary accounts and move their balances to permanent accounts to be carried forward to the next period.

Post-closing trial balance - This is prepared after closing entries are made. Its purpose is to test the equality between debits and credits after closing entries are prepared and posted. The post-closing trial balance contains real accounts only since all nominal accounts have already been closed at this stage

The main purpose of the accounting cycle is to record all the transactions systematically without missing an entry. It leads to the accuracy of all financial records. The accountant prepares the financial statements considering accounting records and cycle.

So it acts as a stepping stone or base for financial statements.

for me the most difficult part to understand was preparing a closing Trial Balance.