In week three we had three primary learning objectives. The three objectives were preparing closing entries, reversing entries, and a post-closing trial balance, preparing a financial statement worksheet, and to prepare a classified income statement, retained earnings statement and balance sheet.
In order for a company to close the books at the end of a financial period the closing entries are made into the accounting journal based on the account balances on the adjusted trial balance. These closing entries transfer the balances of temporary accounts to permanent accounts. Reversing entries are done to cancel any adjusting entries involving payments or cash receipts that have not been made or received at this point. This allows a company to avoid explaining the connection of a particular payment or receipt from the current period to a previous period. A Post closing trial balance is a list of the balances after all closing entries are posted to the ledger. The post- closing trial balance also gives the opening balances for the new accounting period.
The reason for using a financial statement worksheet normally comes from large companies. They need this worksheet due to a large amount of journal entries. Multiple accountants can add to this worksheet and fill out the needed information on the designated areas. This worksheet allows accountants to also quickly see mistakes that have been made. This also allows them to easily correct the mistake as well. When large corporations prepare financial statements the number of accounts increase as the corporation becomes larger and the need for these worksheets are crucial in correctly maintaining these financial