Completing the Accounting Cycle

Video Transcript

"Hi there, we're talking again about accounting. I'm Spencer Cottam with Account Teams in Salt Lake City. We help people with their accounting problems and help them figure out where their money is going and where it should have gone, things like that. Today I'm going to talk to you about completing the accounting cycle. After journal entries have been made and after posting has been done, then certain information can be generated through things called a balance sheet or a profit and loss statement or accounts receivable summary or accounts payable summary. Basically it tells you what you owe and who do you owe it to and what kind of shape you're in. And from these facts, bankers can get information, how worthy you are for loans. You can get an idea whether your business ought to keep going or not keep going or what direction you should take. After you generate these financial statements, usually you would close off all your accounts for the end year period, usually at year end for most people and so you can start with the accounts, you don't want to carry the stuff from 5 years back so they're closed out and balanced out and then you can start fresh for the next accounting season so you can look at each year individually."