REVIEW OF FINANCIAL

STATEMENT
PREPARATION
STEPS
1. Analyzing business transaction
2. Recording in the journals
3. Posting to ledger accounts
4. Preparing the unadjusted trial balance
5. Making the adjusting entries
6. Preparing the adjusted trial balance
7. Preparing the financial statements
8. Making the closing entries
9. Post-closing trial balance
Analyzing business transaction.
• Personal transactions of the owners and
managers that do not affect the company
should not be recorded.
• Decision may have to be made to identify if
a transactiion needs to be recorded in
special journals such as sales journal or
purchases journal
Recording in the journals.
SPECIAL JOURNALS:
Sales journal
Purchase journal
Cash Receipts journal
Cash disbursement journal
GENERAL JOURNAL
Example:
Sales invoice and delivery
receipt (sales journal)
Official reciepts (cash
recipts journal)
Posting to ledger accounts.
Ledgers - provide chronological
details as to how transactions
affect individual accounts
Posting to ledger accounts.
1. General Ledger - summary of
different subsidiary ledgers
and can serve as a control
account
Posting to ledger accounts.
2. Subsidiary Ledger - can be
done anytime and the balances
are summarized at the end of
accounting period.
Preparing the unadjusted trial balance

The sum of the debit

balances must exactly equal
that of the credit balances.
Making the adjusting entries
a. Accruals
b. Prepayments
c. Depreciation and amortization
expenses
d. Allowance for uncollectible accounts
Preparing the adjusted trial balance

is being prepared
after considering the
effects of the
adjusting entries
Preparing the financial statements
financial reports
Making the closing entries
Income statement accounts
such as revenues and
expenses are closed to
prepare the system for the
next accounting period
Post-closing trial balance
is being prepared to test if
the debit balances equal the
credit balances after closing
entries are considered