Chapter 6
The Accounting Cycle: Statements and Closing Entries
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Similar to the manual system, a computerized system will typically have special sections or jour-
nals to enter similar types of transactions, such as sales and purchases.There will also be a general
journal used for adjusting entries and other specific types of transactions. All these journals will
update the general ledger and other accounts and this information is kept in a database for easy
storage and retrieval.
In effect, all the accountant must worry about is analyzing and creating the journal entries for the
day-to-day transaction, and journalizing the adjusting entries at the end of the period.The day-to-
day transactions do not have to be entered in chronological order since the software will automati-
cally order them when reports are prepared. All the posting to the general ledger, preparing the
various reports, and even preparing the closing entries are done automatically by the computer.
It is the responsibility of management and the accounting department to work with informa-
tion technology personnel to buy or design a system that meets organizational objectives. Manual
systems help accountants learn the basics of their profession; however, in today’s business world,
a properly designed computer system, tailored to the needs of a specific company, can make
accounting more efficient.
