...Accounting Cycle Specified In Nine Steps Abstract The accounting cycle is a series of steps repeated in a reporting period. The account cycles consist of nine steps. The series of steps are analyze business transactions, journalize business transactions, post a business transaction, prepare a trial balance, journalize-post adjusting entries, prepare an adjust trial balance, Prepare financial statements, closing account, and post closing trial balance. Each steps has its own purpose to allow the accounting cycle to function and be able to prepare financial statements based on this procedure. The accounting cycle can be explained in a series of more steps, but this the account cycle in a nine step series. Accounting Cycle Explained in Nine Steps The Accounting cycle is specified as a series of nine steps used to gather and process financial information during a reporting period. The nine steps in the accounting cycle are analyzing business transactions, journalize transactions, post to ledger accounts, prepare a trial balance, post adjusting entries, prepare a adjusted trial balance, prepare financial statements, post closing entries, and prepare-a post closing trial balance. The accounting cycle is repeated in each reporting period, which involves recording transactions in order to prepare financial statements such as an income statement, statements owner’s equity, and a trial balance for proper external and internal decision making. The accounting cycle...
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...performed by the company in order to record all the business transactions during the accounting periods. There are several sequences includes in the accounting cycle such as identifying, collecting and analyzing documents and business transactions, records the process in 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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...III. 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...
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...year 14 the company realized that there have been some issues with the financial statements already published and those under publication. After analyzing the financial statements of the company we have summarized some of the key evidences which indicate the cash flow problems: One of the most important factors indicating the liquidity position of any organization is by analyzing the change in current ratio and quick ratio over a period of time. From the chart below we can see that the liquidity position of the company has declined significantly over a period of time. We believe year 13 was a big indicator when the management should have analyzed the operations as there is huge decline in the liquidity position. The second most important indicator to analyze the performance of any company is to compute the operating results of the company. Some of the key indicators of operating performance is gross margin, operating margin and net income margin. An analysis of trend in all the three will help summarize the performance of the company. From the above chart we can see that all the operating matrix have shown a declining trend. The situation started getting worse from year 13 onwards. The management should have taken adequate steps to revive operations when the financial conditions started getting worse in year 13. On analyzing the cash flow statement of the company we can see that there has been significant increase in cash flows from...
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...during the reporting period for both feedback and predictive purposes. Classification and Organization The SCF is classified on the basis of the type of cash flow: •Operating activities are the principal revenue-producing activities of the enterprise and the related expenditures. * Cash inflow from operations is measured as cash received from customers or clients. * Cash outflows are those disbursements for operating activities, such as cash paid for inventories, wages and salaries, income taxes, and rent and other overhead costs. * Operating activities relate to net earnings (rev. + exp.), not comprehensive income. * If the company has recognized specific amounts that are part of other comprehensive income, these transactions or events are not included in operating activities. * Therefore, net earnings is the reference point for operating activities on the SCF. •Investing activities are those activities that relate to long-term assets and investments. * The acquisition and disposal of property, plant, and equipment; intangible assets; other assets; and investments are all included in this section. * Changes in (current) operating assets, such as inventory and accounts receivable, are excluded from this section and included in operating activities. •Financing activities relate to borrowings of the entity and contributed owners' equity. * Changes in operating liabilities, such as accounts payable, are excluded from this section and included...
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...Analyzing Business Transactions LEARNING OBJECTIVES 1. 2. Record in equation form the financial effects of a business transaction. Define, identify, and understand the relationship between asset, liability, and owner’s equity accounts. Analyze the effects of business transactions on a firm’s assets, liabilities, and owner’s equity and record these effects in accounting equation form. Prepare an income statement. Prepare a statement of owner’s equity and a balance sheet. Define the accounting terms new to this chapter. LP2 Chapter NEW TERMS accounts payable accounts receivable assets balance sheet break even business transaction capital equity expense fair market value fundamental accounting equation income statement liabilities net income net loss on account owner’s equity revenue statement of owner’s equity withdrawals 3. 4. 5. 6. www.southwest.com Rollin King and Herb Kelleher had a simple notion when they got into the airline business: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies almost 100 million passengers a year to 63 cities all across the country. In an economy where airlines struggle to stay out of bankruptcy, Southwest has flourished. Other airlines have tried to imitate...
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...Introduction According to the American Accounting Association, accounting is a process to measure, identify and communicate to show economic information by the user. ( http://tutor2u.net/business/accounts/intro_accounting.htm). Besides that accounting also can be define as the language of business because it is a system to record , analyse and summarize of financial transaction ( http://www.cliffsnotes.com/study_guide/Introduction-to-Accounting.topicArticleId-21081,articleId-21001.html). Accounting is a transaction of selling and buying . After that organise these information presenting it for decision-making. Accounting is important to record all of the business transaction easy for the owner to know whether they are financially successful and to know how much they owed and how much they owned.(Frank Wood & Alan Sangster ,2008,Business Accounting 1 eleventh edition, pg4) Summary Accounting is a process where the user identify, measure and communicate the economic information to perform decision and judgement. Bookkeeping is required in accounting to record data . There are two equation used in accounting which is accounting equation (assets equal to liabilities plus equity) and profit determination equation (profit equal to revenue minus expenses). Double entry system is used inside the book keeping. T-account is a shape use when doing double entry system. It divided into left-hand side called “debit” and right-hand side called “credit”...
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...1. Question 1: * Proficient: * Describe the steps in recording and posting the effects of a business transaction and provide some examples of source documents used in these steps. Some examples of accounting source documents include: Bank statements, cash register tape, credit card receipts and supplier invoices. When recording and posting the effects of a business transaction the following steps apply: 1. Identifying and analyzing business transactions to determine the accounts effected and the amounts to be recorded. A business document is a basis for recording a transaction. 2. Recording in the journals which are electronic or paper books where transactions are recorded using T-accounts process. This is when 2 accounts are entered in chronological order showing debits on the left and credits on the right. 3. Posting all transactions to the ledger which is a collection of accounts that shows the changes made to each account as a result of past transactions and the current balances of those transactions. Once the transactions are posted to the ledger the balances of each account can be determined. 4. Unadjusted trial balance is conducted when the recorded debits and credits need to be reviewed on a report for equality of the debits and credits. 5. Adjusting entries are prepared to update accounts before they are finalized in the financial statements by making entries of the expenses that may have been incurred but not entered. ...
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...than 6,100 retail banking offices, more than 18,000 ATMs and an online banking with more than 25 million active users. Even if you are not a Bank of America customer, you have probably used some bank’s ATM system and/or online banking services. The following instructions require you to consider the business processes delivered to you as a consumer of banking services via an ATM and to help you explore the underlying information management requirements of an ATM system. Assignment: 1. List the likely core business functions (high level; major business and financial services) at Bank of America as part of its product and service offerings? 2. List the steps required in a typical ATM transaction, such as drawing out cash or transferring funds from one account to another, and briefly explain why each of these steps is necessary. Use a table to organize your response...
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...Accounting Unit 11 Learning Outcomes Describe the interaction with an accounting department Demonstrate a basic journal entry Set up an account Summarize amounts paid Introduction Every business must keep records showing transactions relating to goods or services rendered and the costs incurred to run the business, known as expenses. This process is referred to as bookkeeping, which is simply entering each transaction that affects the financial position of the business in a ledger. The term accounting refers to the process of measuring recording summarizing and analyzing the information recorded in the ledger. This helps the company plan and control the activities of the business. Based on this information the company can make sounds business decisions and communicate it the bank, auditors and shareholders. How does this relate to payroll? The payroll department is responsible to ensure that all payroll transactions are accurately recorded in the general ledger of the company. Good internal controls over payroll expenses help the business achieve efficiency and to safeguard the company from financial exposure. Payroll accounting handles the expenses and liabilities arising from compensating employees. Basic payroll transactions which must be accounted for in the general ledger are wages, the employee’s portion of CPP and EI, the employer’s payroll expense (statutory expenses in Ontario) includes the employer’s share of CPP, EI, employer’s also pay for provincial...
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...all types of businesses, transactions take place. Transactions vary from such things as sales, expenses, wages, purchases, and receivables. These transactions are maintained in various journals and ledgers and tell the financial story of the business. The process of maintaining this financial story is called the Accounting Cycle. Evaluation There are ten steps involved in completing the accounting cycle. They are as follows: “(1) Transactions are analyzed and recorded in the journal. (2) Transactions are posted to the ledger. (3) An unadjusted trial balance is prepared. (4) Adjustment data are assembled and analyzed. (5) An optional end-of-period spreadsheet is prepared. (6) Adjusting entries are journalized and posted to the ledger. (7) An adjusted trial balance is prepared. (8) Financial statements are prepared. (9) Closing entries and journalized and posted to the leger. (10) A post-closing trial balance is prepared.” (Warren, Reeve, & Duchac (2012) pg. 162) The accounting cycle begins with analyzing and recording transactions. The bookkeeper, for example, would review the invoices, purchase orders, bank statements, etc. After the transactions have been analyzed they are now ready to be posted to the journal using the double-entry accounting system. The double-entry accounting system means that the transactions are recorded in at least two or more accounts so that the debits and credits equal. After the transactions are recorded in the journal...
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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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...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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...end-product reports in accounting, it delivers information to different users. Accounting is a means through which information about a business entity is communicated. Accounting Definition: Technical definitions of accounting have been published by different accounting bodies. The American Institute of Certified Public Accountants (AICPA) defines accounting as: "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof." To further understand what accounting is, we must take a look at the different definitions. Accounting as a Science: Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of information. Accounting as an Art: Accounting is the art of recording (journalizing), classifying (posting to the ledger), summarizing in a significant manner and in terms of money, transactions and events which are, in part, at least of a financial character, and interpreting the results thereof to interested users. Accounting as an Information System: Accounting is a service activity, which functions to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. The first definition emphasizes the following: Identifying - in accounting, this is the process...
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...accounting cycle. The company began and has been operated for most of its 15 years with a couple of individuals and has expanded into a respected company. 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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