...Journalizing, Posting, and Preparing a Trial Balance Below please find the explanation of our finances for the month of May: On the first of the month our stockholders invested $25,000 cash in exchange for common stock. The company needed a secretary to handle all administrative duties and we hired for this position which salary will be $2,000 monthly. Supplies were needed from Read Supply Company which incurred an expense of $2,500. The rent for our offices is $900. In addition, we were able to pay 40% or $1,000 of the balance due Read Supply Company. We received a total of $6,800 for services provided our clients. The general goals of financial reporting are to keep an accurate and ethical record of all financial transactions of a company while maintaining transparency and adhering to the generally accepted principles of accounting. The steps I too in the recording process for this assignment were to first make journal entries to accurately depict all financial transactions for the company. After making and double checking my journal entries, I entered them into the general ledger. It is essential to have this information available in both forms – one on a day-by-day account, and an account of analysis. Then, I prepared the trial balance report for the same company. These steps adhere closely to the principles of accounting. I double checked my work to ensure accuracy and fully satisfied the basic accounting equation of Assets = Liabilities + Owners’ Equity...
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...Hewlett-Packard | Preparing Balance Sheets and Statements. | Checkpoint 4 | | Cocina Williams | 1/17/2013 | | Preparing balance sheets and statements Checkpoint 4 By Cocina Williams Due 01/17/2013 Acc225/Donald Huntley Quick Study 4-2 pg. 156 List the following steps of the accounting cycle in their proper order: a. Preparing the post-closing trial balance. b. Posting the journal entries. c. Journalizing and posting adjusting entries. d. Preparing the adjusted trial balance. e. Journalizing and posting closing entries. f. Analyzing transactions and events. g. Preparing the financial statements. h. Preparing the unadjusted trial balance. i. Journalizing transactions and event F. Analyzing transactions and events. I. Journalizing transactions and events. B. Posting the journal entries. H. Preparing the unadjusted trial balance. C. Journalizing and posting adjusted entries. D. Preparing the adjusted trial balance. G. Preparing the financial statements. E. Journalizing and posting the closing entries. A. Preparing the post-closing trial balance. Exercise 4-4 Pg. 159 WEBB TRUCKING COMPANY Balance Sheet December 31, 2005 Assets Current assets Cash......................................................... $ 7,000 Accounts receivable ..................................... 16,500 Office supplies........................................... 2,000 Total current assets...................................... 25,500...
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...Overall Accounting Cycle Hannah Tran ACC/421 November 11, 2013 Overall Accounting Cycle Maintaining a set of accounting records is not optional, especially for large companies or whomever needs to go through financial audits. These accounting records are done through-out what it is called an accounting cycle. An accounting cycle is a set of procedures to record transactions and prepare financial statements (Kieso, Weygandt, & Warfield, 2012). This is also to ensure the accuracy and conformity of financial statements to GAAP. This set of procedures includes: (1) identifying and measuring transactions; (2) journalizing; (3) posting; (4) preparing an unadjusted trial balance; (5) making adjusting entries; (6) preparing an adjusted trial balance; (7) preparing financial statements; and (8) closing (Kieso, Weygandt, & Warfield, 2012) . This paper will summarize the overall accounting cycle for the inventory department at Sunrise Growers. Nowadays with the help of computerized accounting system, mathematical errors have been reduced tremendously when recording accounting transactions. In addition, computerized accounting system has minimized the workload and increased productivity. Although Sunrise Growers uses a computerized accounting system to record transactions, this paper will assume the accounting cycle done is manually. Identifying and Measuring transactions This step is to analyze the transactions and determine what to record. On October 10, Sunrise...
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...Gradually over time the accounting cycle has evolved much like business has evolved; the multiple steps have been reduced as technology has simplified the process, “today, most companies use accounting software that processes many of these steps simultaneously” (“What is the accounting cycle?” 2007, para. 3). The accounting cycle consists of: identifying, journalizing, posting, trail balance, adjusted entries, adjusted trial balance, preparing financial statements, closing, post-closing trial balance, reversing entries, and financial statements (Kieso, Weygandt, & Warfield, 2007, Chapter 3). Identifying a transaction or event is the first step in the cycle; businesses engage in various activities on a daily basis, as a result, determining when to record and activity is crucial. Once the activity has been identified as a transaction that must be recorded, then the next step is to journalize the transaction. The journalizing process can be done in a variety of ways; the most common method is the general journal, although some companies keep other special journals. The next step in the accounting cycle is posting, which is “the procedure of transferring journal entries...
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...step, journalizing. Journalizing is the process of recording a transaction in the journal. To do this we 1) record the date of the transaction in the date column, 2) the title of the account to be debited is recorded at the left hand margin under the description column, and the amount to be debited is entered in the debit column, 3) the title of the account to be credited is listed below and to the right of the debited account title, and the amount to be credited is listed in the credit column,4) a brief description may be entered below the credited account, 5) the Posting Reference column is left blank when the journal entry is initially recorded, when transferring to the ledger, this column will be utilized. In double entry accounting the debits must equal the credits. The second step in the accounting cycle is to post. When posting we transfer the debits and credits from the journal to the ledger. This is done by 1) the date of the journal entry is entered in the date column, 2) the amount is entered into the debit column for the correct posting title, 3) the journal page number is entered in the Posting Reference column and 4) the account number is entered in the Posting Reference column in the journal. In step three we need to verify that the debits and credits transferred from the journal to the ledger are equal, an unadjusted trial balance is prepared. When preparing an unadjusted trial balance we 1) list the name of the company, the title of the trial balance, and...
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...The Process of the Accounting Cycle The process that goes through analyzing and journalizing transactions and is finished with a post-closing trial balance is the accounting cycle. The accounting cycle reports the financial information during the accounting period. It has 10 steps. In order to do it all correct it is better to follow step by step, instead of rushing it then later have problems with the number not adding up. Here all the steps and the explanations throughout the accounting cycle. First step is that the transactions are analyzed and recorded in the journal. In easier terms, you look at the transactions that happened during the accounting period and then enter them into the journal. To make sure, that everything is done right follow four easy steps. Read each description of the transactions to know if an asset, liability, owner’s equity, revenue, expense or drawing account is affected. Then next look at each account and see if it increases or decreases. After you determine that, the record them as debit or credit by following the rules of debit and credit. An example, since asset accounts are increased with debits, they normally have debit balances, and liabilities usually have a credit balance. After all that, then you record each transaction using a journal entry. The second step of the accounting cycle is posting the transactions to the ledger. Transactions that are entered into the journal are then posted to the accounts in the ledger. Debits and credits...
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...recording and posting the effects of a business transaction and provide some examples of source documents used in these steps. A company begins a business transaction as a result of a management decision. The company transaction is evidenced by a source document. The information obtained from source documents provides a starting point to prepare a journal entry. After the journal entry is prepared, it is posted to accounts in the ledger. Some examples of source documents used in these steps are bills received from suppliers for goods/services rendered, bills sent to customers for goods sold/services performed, and cash register tapes. Define debit and credit and name the types of accounts that are (three correct responses): Debit is an account entry placed on the left side of a T-account. Credit is an account entry placed on the right side of a T-account. Increased by a debit. Cash account. Decreased by a debit. Liabilities and stockholder’s equity. Increased by a credit. Service revenue account. Decreased by a credit. Expense account. Question 2: Proficient: Which steps in the accounting cycle are performed throughout the accounting cycle? The steps performed throughout the accounting cycle are transactions, journal entries, and posting. Which of the steps in the accounting cycle are performed only at the end of the accounting period? Preparing a trial balance, preparing financial statements, journalizing and post adjusting entries, journalizing and posting closing...
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...Accounting Cycle d. Analyze Transactions e. Journalize the Transactions f. Post to Ledger Accounts g. Prepare a Unadjusted Trial Balance h. Journalize and Post Adjusting Entries i. Prepare an Adjusted Trial Balance j. Prepare Financial Statement k. Journalize and Post Closing Entries l. Post-Closing Trial Balance m. Optional Reversing Entries IV. Conclusion While not having an accounting cycle for the business can possibility hurt the company, following the accounting process and steps will help with the accounting procedure. Many organizations will have accounting established to process all the business revenues and expenses. To have a successful business people follow the accounting actions of identify, record and communicate the daily transactions of the company. After the actions are completed then the company will go through the process of the accounting cycle. There is a ten step accounting cycle that business owners can go threw to show the revenues and expenses. Collect data, analyze the transactions, record transaction to journal, post from journal to ledger, prepare unadjusted trial balance, record adjusting entries to ledger, prepare adjusted trial balance, prepare financial statement, close temporary accounts, and lastly post-closing trial balance. Accounting in Action Accounting is a system that businesses use for all of the revenue transactions and for all of the expenses made in the business...
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...Chapter 3 1. | Accountants divide the economic life of a business into artificial time periods because of the time period assumption. A. | True | B. | False | | 2. | Which of the following time periods would not be referred to as an interim period? A. | Monthly | B. | Annually | C. | Semi-annually | D. | Quarterly | | 3. | An accounting time period that is one year in length is referred to as A. | a reporting period. | B. | a fiscal year. | C. | an interim period. | D. | a distressed year. | | | | 4. | The time period assumption states that A. | companies must wait until the calendar year is completed to prepare financial statements. | B. | companies use the fiscal year to report financial information. | C. | the economic life of a business can be divided into artificial time periods. | D. | companies record information in the time period in which the events occur. | | 5. | An accounting time period that is one year in length is A. | a calendar year. | B. | a fiscal year. | C. | an interim period. | D. | a quarterly period. | | 6. | The revenue recognition principle dictates that companies recognize revenue in the accounting period in which payment is received. A. | True | B. | False | | 7. | The revenue recognition principle dictates that revenue should be recognized in the accounting records A. | when cash is received. | B. | when performance obligation is satisfied. | C. | at the end of the month. | ...
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...consulting D. Cost accounting, production scheduling, recruiting 3) Communication of economic events is the part of the accounting process that involves A. identifying economic events. B. preparing accounting reports. C. recording and classifying information. D. quantifying transactions into dollars and cents. 4) The body of theory underlying accounting is not based on A. physical laws of nature. B. principles. C. definitions. D. concepts. 5) The private sector organization involved in developing accounting principles is the A. Feasible Accounting Standards Body. B. Financial Accounting Standards Board. C. Financial Auditors' Standards Body. D. Financial Accounting Studies Board. 6) GAAP stands for A. Generally Accepted Auditing Procedures. B. Generally Accepted Auditing Principles. C. Generally Accepted Accounting Procedures. D. Generally Accepted Accounting Principles. 7) Which of the following statements is not true? A. Expenses increase stockholders' equity. B. Expenses decrease stockholders' equity. C. Expenses are a negative factor in the computation of net income. D. Expenses have normal debit balances. 8) All of the financial statements are for a period of time except the A. income statement. B....
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...Debit implies the increasing value and Credit implies the decreasing value. 3. Heath Precourt, a fellow student, contends that the double-entry system means each transaction must be recorded twice. Is Heath correct? Explain. He is Incorrect. Under the double-entry system, the two-sided effect of each transaction is recorded in appropriate accounts. According to the basic accounting equation, each transaction must affect two or more accounts to keep the basic accounting equation in balance. In in other words, for each transaction, debits must equal credits. The equality of debits and credits provides the basis for the double-entry system of recording transactions. 4. Erica Mendez, a beginning accounting student, believes debit balances are favorable and credit balances are unfavorable. Is Erica correct? Discuss. Erica is not correct. Debit and credit are two actions that are opposite in nature. A debit balance only means that debit amounts exceed credit amounts in an account and a credit balance only means that credit amounts are greater than debit amounts in an account. An account that is affected by an...
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...journals, posting the journalized amounts to ledger, preparing the trial balances and financial statements. Usually, an accounting cycle of the company begins when a business transaction take place and finishes the accounting cycle when the financial statements are prepared. The period of the accounting...
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...balancing accounts. Along with journalizing transactions and adjusting entries, the accounting cycle involves closing entries and preparing a post-closing trial balance. I believe that the most important skills learned in an accounting position is to understand the basic equation of accounting, assets + liabilities + stockholder’s equity. Most accounting goes back to this equation as the basis for balancing accounts when transactions are journalize. The two types of accounting methods used to maintain financial records and prepare reports are the accrual and cash basis accounting. Accrual basis accounting is accepted under the Generally Accepted Accounting Principles (GAAP). This principle states that the accounting transactions are recognized and recorded when the expense or revenue actually occurred, not when cash changes hands (James, 2012). The benefit of accrual basis accounting is expenses and revenues which can be matched as they happen, and much more effective for monitoring cash flow (Epstein, n.d.). Accrual accounting has a more complicated recording process than cash basis accounting which can be a disadvantage when it comes time to pay taxes. Since this accounting method requires that expenses and revenue are recorded right away, the taxes must be paid on the recorded revenue; even if it’s not been paid (Reference For Business, 2012). The adjusting entries are recorded at the end of every accounting period after the trial balance. There are five types of adjusting...
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...processes followed by a conclusion. Purpose of Accounting The purpose of accounting to gather and report on any financial information within the organization about things such as: the performance of the company, their financial position, and the cash flows of the company. With this information the company can then make business decisions about management of their business, investments to be made, or money they can lend. All of this information is known as the accounting records and accounting transactions and recorded as invoices for either suppliers or customers of the company. Once the financial information has been added to the accounting records it is all put together into financial statements to include the following: income statement, balance sheet, statement of cash flows, statement of retained earnings, and any disclosures. Purpose of Financial Reporting Documents, or the financial reports, are gathered in order to keep track of money going in or going out. Essentially, there is a record of how much money your business is making or losing. Anyone investing in the business has the right to know how their money is being used and can know this by looking at the financial reports. Financial reporting must follow common and statutory law and done so in an ethical manner. The financial statements must follow the rules and guidelines of the accounting frameworks. The frameworks are Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards...
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...ACCOUNTING CYCLE The Series of business transactions which occur from the beginning of an accounting period to the end of an accounting period is referred any specific period of time for which a summary of business’s transaction is prepared. Steps in Accounting Cycle:1. 2. 3. Journalizing (Recording) Posting to Ledger (Classifying) Final Account (Summarizing) Now Explain Steps:1 Recording:- This is the basic function of accounting. All business transaction, as evidenced by some documents such as Sale bill, Pass book, Salary Slip ect are recorded in the books of account. This is called recording process. 2. Classifying:- All entries in the Journal or books of Original Entry should be posted to the appropriate ledger accounts to find out at a glance the total effect of all such transactions in a particular account. 3. Summarizing:- It is concerned with the preparation and presentation of the classified data in a manner useful to the Internal a well as the external users of financial statements. This process leads to the preparation of the following financial statements:a) Trial Balance b) Profit & Loss Account c) Balance Sheet d) Cash flow Statement. DIFF. BETWEEN BOOK KEEPING AND ACCOUNTING BOOK KEEPING ACCOUNTING 1. It is a Process concerned with recording of transaction. 2. It is the basic of accounting. 1. It is a process concerned with Summarizing of the recorded transaction. 2. It is the basic for business language. for accounting are 3. Person responsible...
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