Page 383 - Accounting Information Systems

354 PART II Transaction Cycles and Business Processes

7. Journalize and post adjusting entries. Journal vouchers for the adjusting entries are prepared and
posted to the appropriate accounts in the GL.
8. Prepare the adjusted trial balance. From the adjusted balances, a trial balance is prepared that
contains all the entries that should be reflected in the financial statements.
9. Prepare the financial statements. The balance sheet, income statement, and statement of cash flows
are prepared using the adjusted trial balance.
10. Journalize and post the closing entries. Journal vouchers are prepared for entries that close out the
income statement (temporary) accounts and transfer the income or loss to retained earnings. Finally,
these entries are posted to the GL.
11. Prepare the post-closing trial balance. A trial balance worksheet containing only the balance sheet
accounts may now be prepared to indicate the balances being carried forward to the next accounting
period.
The periodic nature of financial reporting in most organizations establishes it as a batch process,
as illustrated in Figure 8-4. This often is the case for larger organizations with multiple streams of
revenue and expense transactions that need to be reconciled before being posted to the GL. Many
organizations, however, have moved to real-time GL updates and FRSs that produce financial state-
ments on short notice. Figure 8-5 presents an FRS using a combination of batch and real-time com-
puter technology.

FI GUR E
8-5 GL/FRS USING DATABASE TECHNOLOGY

Financial General
Data Processing Department Reporting Group Ledger Dept.
Daily Procedures GL Update and
Period-End Financial Reporting Prepare Adjusting
and Closing Entries
Sales
System
Adjusted
Trial
GL Master GL History Other Files Bal
Cash Rec
System
GL Master Financial
Update Statements
GL
Purchases
System Post-
Update GL and Prepare Closing
Adjusted Trial Balance, TB
Financial Statements,
JV Trans
JV Trans and Post-Closing Trial
Other File Balance
TPS File
Summary
Reports

Review

Summary
Daily TPS applications create batch Reports
totals of transactions on disk. At the
end of the run, these are updated
against the GL master (and other File
GLS files) and recorded to the journal
voucher file.