Please help with a peers response on a discussion:
In your follow-up posts, discuss your experiences working on Milestone One of the final projects. Has the reading and homework prepared you for this work? What have been the challenges so far?
The way that the textbook describes the order of the financial statements is most comfortable for me, but this is only because I have been doing it this way since taking my first accounting class in high school. Either way definitely makes sense, but from only doing it in an educational standpoint I think that doing the income statement before the closing entries makes the most sense but this could change as I further my career and begin doing it outside of school. I can see why doing the closing entries before preparing the financial statements would be beneficial, as this ensures that all of a business’s temporary accounts are at zero and the accounts reflected are all strictly permanent accounts.
Closing entries in the accounting cycle is an essential factor to take into consideration. Following the completion of the income statement, the closing entries should be completed before the income statement. This is because the income statement offers a summary of the company’s revenues, expenses, gains, and losses over a period of time. The balance sheet is used to summarize a company’s assets, liabilities, and equity at a single point in time, and the closing entries then transfer these sums from the income statement to the balance sheet. This ensures that an accurate report of the company’s financial performance as well as an accurate evaluation of its overall financial situation are generated.