Week 5 — Completing the Accounting Cycle
Why this matters
Whether you groom dogs and close the year, run a farmers' market stall through its first season, or keep a repair shop's books, the statements and closed books show what the business earned and where it stands.
In plain language
At the end of a month, a business owner wants three answers: how much did we earn, what do we own and owe, and how do we start next month fresh? This week you answer all three for the bicycle shop. You prepare its financial statements (the reports that tell outsiders what the business earned and where it stands) in a fixed order. Then you make closing entries (entries that reset the month's revenue, expense, and dividend accounts to zero) so the shop can start Month 2 with a clean slate. Last, you check the books one more time and see the whole accounting cycle from start to finish.
- Already covered: Week 4's adjustments and adjusted trial balance.
- This week: three statements, closing entries, and the full cycle.
- How they connect: every statement figure comes from Week 4's list.
- Where we're going next: Week 6, Merchandising Operations.
Focus
How does a month of balances become three statements and closed books?
By the end of this module, you should be able to:
- [ ] prepare the three statements in order
- [ ] tell net income from cash
- [ ] journalize the four closing entries
- [ ] prove the post-closing trial balance
To-do
Plan your week
- Read Chapter 5 (~35–45 minutes), then the lecture and slides.
- Work the lecture tutorial (60–90 minutes).
- Do the practice set (15–25 minutes).
- Do the Accounting Workshop, the discussion, and the assignment.
- Take the quiz.
This week's checkpoint: close the bicycle shop's books and foot its post-closing trial balance.
You've got this
Take it in order, and ask your instructor if a step snags.
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