what is the proper sequence for end of the month work with combination journal
To determine the proper sequence for end-of-the-month work with a combination journal, you would typically follow these steps:
1. Gather all relevant financial documents and records, such as invoices, receipts, bank statements, and sales records.
2. Start by recording any adjusting entries for the month. These are entries that you make to correct any discrepancies or errors in the accounts. Adjusting entries are commonly used to record items such as prepaid expenses, accrued revenue or expenses, and depreciation.
3. Once your adjusting entries are recorded in the combination journal, you can move on to preparing the trial balance. This is a summary of all your account balances, both debit and credit, to ensure they are equal. The trial balance serves as a starting point for the financial statements.
4. Next, you can create the necessary financial statements, such as the income statement, balance sheet, and statement of cash flows. These statements provide a snapshot of the company's financial performance and position at the end of the month.
5. After preparing the financial statements, you should record any closing entries in the combination journal. Closing entries are used to transfer temporary account balances (such as revenue and expense accounts) to a retained earnings account, ready for the start of the next accounting period.
6. Finally, update your subsidiary ledgers and reconcile your accounts, such as bank accounts and accounts receivable/payable, to ensure they are accurate and properly reflect the month's activity.
Following these steps will help you ensure that the end-of-month work with a combination journal is done in the proper sequence and facilitates accurate financial reporting.