This chapter emphasizes the final steps in the accounting process and reviews the entire accounting cycle. We explain the closing process, including accounting procedures and the use of a post-closing trial balance. We show how a work sheet aids in preparing financial statements.

Conceptual

Explain why temporary accounts are closed each period.

Identify steps in the accounting cycle.

Explain and prepare a classified balance sheet.

Analytical

Compute the current ratio and describe what it reveals about a company's financial condition.

Procedural

Prepare a work sheet and explain its usefulness.

Describe and prepare closing entries.

Explain and prepare a post-closing trial balance.

Appendix 4A-Prepare reversing entries and explain their purpose.