Page 163 - Accounting Principles (A Business Perspective)

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important respects: (1) it excludes all temporary accounts since they have been closed; and (2) it updates the
Retained Earnings account to its proper ending balance.
A post-closing trial balance is a trial balance taken after the closing entries have been posted. The only

accounts that should be open are assets, liabilities, capital stock, and Retained Earnings accounts. List all the
account balances in the debit and credit columns and total them to make sure debits and credits are equal.
Look at Exhibit 24, a post-closing trial balance for MicroTrain Company as of 2010 December 31. The amounts
in the post-closing trial balance are from the ledger after the closing entries have been posted.
The next section briefly describes the evolution of accounting systems from the one-journal, one-ledger manual
system you have been studying to computerized systems. Then, we discuss the role of an accounting system.

An accounting perspective:

Uses of technology

If you are studying in the US, you may want to visit the American Institute of Certified Public

Accountants website at:
http://www.aicpa.org
You will find information about the CPA exam, about becoming a CPA, hot accounting topics, and
various other topics, such as the US states that have passed a 150-hour requirement to sit for the
CPA exam. You can also learn such things as the states that have approved limited liability
companies (LLCs) and limited liability partnerships (LLPs). These forms of organization serve to
place limits on accountants' liability. You can also find the phone numbers and mailing addresses
of State Boards of accountancy and State Societies of CPAs. Browse around this site to investigate
anything else that is of interest. Similar sites are available in other countries as well.

Accounting systems: From manual to computerized
The manual accounting system with only one general journal and one general ledger has been in use for

hundreds of years and is still used by some very small companies. Gradually, some manual systems evolved to
include multiple journals and ledgers for increased efficiency. For instance, a manual system with multiple journals
and ledgers often includes: a sales journal to record all credit sales, a purchases journal to record all credit
purchases, a cash receipts journal to record all cash receipts, and a cash disbursements journal to record all cash
payments. Still recorded in the general journal are adjusting and closing entries and any other entries that do not fit
in one of the special journals. Besides the general ledger, such a system normally has subsidiary ledgers for
accounts receivable and accounts payable showing how much each customer owes and how much is owed to each

supplier. The general ledger shows the total amount of accounts receivable and accounts payable, but the details in
the subsidiary ledgers allow companies to send bills to customers and pay bills to suppliers.
Another innovation in manual systems was the "one write" or pegboard system. By creating one document and
aligning other records under it on a pegboard, companies could record transactions more efficiently. These systems
permit the writing of a check and the simultaneous recording of the check in the cash disbursements journal. Even
though some of these systems are still in use today, computers make them obsolete.

Accounting Principles: A Business Perspective 164 A Global Text