...The accounting process starts by analyzing transactions and source documents that describe transactions and events. Examples of source documents are bank statements, checks and purchase orders. After we have analyzed the transactions, events and source documents, we are ready for the next 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...
Words: 784 - Pages: 4
...The “Accounting Equation” was the first PhxKlips. The ALOE equation was the crux of this PhxKlips. This equation is summarized as: Assets = Liabilities + Owner’s Equity. It is the foundation for all accounting tasks and principles. The use of ALOE is a means for easy recall of the equation. “Debits and Credits” was the second PhxKlips. This PhxKlips delineated when to use debits and when to use credits in relation to the posting of income and expenses. Expenses are recorded as debits on the left side of a T account and income is recorded as a credit on the right side of the T account. This PhxKlips made it clear to me that debits increase assets and expenses and decrease liability and equity accounts as well as increasing income accounts. The “Financial Statements” PhxKlips delineated four financial statements that are used to report all company financial information in standard formats. The four statements are the Income Statement, the Balance Sheet, the Retained Earnings Statement and the Statement of Cash Flow. Together they provide a complete picture of the financial condition of a company. This PhxKlips details how to compile and read each of the four types of statements so that I could make sense out of the information provided on each one. The Income Statement contains the revenue and expenses with the resulting net income or loss for a specific period. The Balance Sheet shows the company’s total assets, liabilities and owner’s equity on a specific date. The Retained...
Words: 347 - Pages: 2
...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...
Words: 342 - Pages: 2
...ACC 201 Final Project Part I Accounting Cycle Report Your Name Southern New Hampshire University Accounting records provide detail information of all transactions and events occurred in a business enterprise during the accounting year. To maintain accounting records, accounting cycle has a vital role. In this project we are going to discuss about the accounting cycle, its role in maintaining records, steps in accounting cycle, effects of omitting steps in accounting cycle on business progress, important financial statements and their importance. The accounting cycle consists of the following steps: Opening accounts in the ledger with the opening balance; identifying and recording transactions events occurred during the accounting year;...
Words: 898 - Pages: 4
...Accounting Cycle ACC/421 July 26, 2011 Jana Howie Accounting Cycle Accounting cycle is “the name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements” (Investopedia, 2011). The basic eight steps of the accounting cycle will be explained and described in this paper. Identifying and Recording These first steps are associated with one another and are done during the month while transactions happen. Business transactions are sorted into debits and credits that will be entered into accounting records. These transactions are identified through an original source document i.e. invoice, time card, purchase order). Journalizing “A company records in accounts those transactions and events that affect its assets, liabilities, and equities” (Kieso, Weygandt, & Warfield, 2007, p. 69). Journals include sales, purchases, cash receipts, general and cash payment journals; these in which are kept in chronological order. Posting This occurs when transferring the journal entries to the ledger accounts. Ledgers are kept by account; these include T-account forms or balances. A “general ledger is usually monthly while subsidiary ledgers are usually done daily” (Kieso, Weygandt, & Warfield, 2007, p. 68). Trial Balance A calculation that verifies the total of debits is equal to the total of credits. An unbalanced trial balance...
Words: 466 - Pages: 2
...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...
Words: 1039 - Pages: 5
...Accounting Cycle Nelson L Romeu ACC/421 University of Phoenix March 5, 2012 Prof. Dawn Brauer Accounting Cycle The accounting cycle is a logical process used to help achieve the basic function of accounting, which is to identify, record, and correspond information. A business or organization may have its own unique way of performing its accounting cycle, but each must perform the task in one way or another. ADCON (Administration and Accounting) is a small-operated business with a very simplified description of the 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...
Words: 815 - Pages: 4
...Accounting Cycle Yesenia Arroyo AC114 June 24, 2014 Dr. Tonjua McCullough Accounting Cycle I. Introduction II. Accounting in Action a. Identify b. Record c. Communicate 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...
Words: 834 - Pages: 4
...Accounting Cycle Paper ACC421 June 3, 2013 Accounting Cycle Paper Although I work for a major corporation, Walgreens, I have nothing to do with the accounting department or the cycle. I will however use this paper to explain the accounting cycle as well as the people that would be involved within the cycle. Generally the people involved in the accounting cycle would be record-keepers, accounting clerks; financial managers as well as staff accountants all have a hand in the parts of the accounting cycles. Bookkeepers and accounting clerks are generally the ones that record the entries and prepare statements for financial managers and staff accountants to approve. The first step of the accounting cycle would be to identify and analyze the transaction and events that need to be accounted for. Even though the generally accepted accounting principles (GAAP) has guidelines there are no rules to what events or transaction a company is required to record. A company should record every sale or purchase no matter how big or small it is. Once these transactions or events have been analyzed, they are recorded in the next step which is journalizing the transactions. There are several different places these transactions are recorded. Some of these places are the general journal, cash receipts journal, cash disbursements journal, purchases journal, sales journal and other special journals depending on the company (Kieso, Weygandt, & Warfield, 2012). Then these transactions...
Words: 746 - Pages: 3
...one way or another. That is where accounting will play a role in their lives. The students will know the primary objectives when it comes to accounting. The students will also be explained about the basic terminology of the accounting process. They will also be explained about how accounting has affected my personal life and also the ethics of my personal life. Accounting is also a process that deals with different types of math. Accounting also deals with recording, transactions, credits, interpreting and summarizing just about everything that has to do with numbers. It is very important that a person in the career field of accounting performs a flawless job in the outcomes of their work. A mistake as little as being off by one number can make a huge difference in the overall work that has been done. Accountants may need to go over the work more than once just to make sure that the numbers they have recorded or precise. That is what the students will need to know when it comes to the life of an accountant. It is also important in their everyday life if they feel as though they may need to be on a budget, trying to save or invest money or trying to be sure that they do not overspend the money they have if they are not trying to be on a budget. Accounting is the language of a business and anything that has to do with money has to do with accounting. They go hand-in-hand and one cannot be one without the other. PRIMARY OBJECTIVE OF ACCOUNTING The primary objective of an accountant...
Words: 1182 - Pages: 5
...Accounting Cycle Accounting Cycle For 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. ...
Words: 775 - Pages: 4
...Accounting Cycle Paper ACC/421 Accounting Cycle Paper In this paper I will outline the purpose of both accounting and financial reporting within an organization in general. I will also give a description of the people, processes, and systems that are a part of the accounting and financial reporting 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...
Words: 741 - Pages: 3
...Accounting cycle can be defined as a sequence or process that is involved in completing the accounting process. Accounting cycle also refers to traditional procedures that 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...
Words: 1750 - Pages: 7
...Accounting Cycle Paper ACC/421 September 12, 2011 Accounting Cycle Paper The accounting cycle is very important to maintaining orderly transactions within an organization’s accounting records. Companies can simply not just give and receive money without recording the events that lead to the transaction otherwise they would be faced with a night mare when trying to reconcile their records. In my company the accounting cycle is used for accounting transactions that affect the comings and goings of money within the organization. This usually begins with a Source Document. Source Documents consist of a description of the accounting transaction, this can be a sales or purchase transaction. Sales transactions in my company are usually performed through the use of a Point of sale system. In a purchase transaction a cash receipt or invoice from the company providing the product or service. Source documents, whether from sales or purchase transactions serve as objective evidence that the transaction did occur and part of the audit trail. Being an early document in the accounting cycle, source documents provide the information required to analyze and classify the transaction in order to be journalized in the accounting system. The next step in the accounting cycle is to journalize the transactions. In my company this is usually the electronic journal maintained by the Point of sale system, or a purchase order created by a manager at the time a purchase is made. Sales transactions...
Words: 763 - Pages: 4
...Accounting Cycle Accounting cycle is the financial process starting with recording business transactions and leading up to the preparation of financial statements. This process demonstrates the purpose offinancial accounting--to create useful financial information in the form of general-purpose financial statements. In other words, the sole purpose of recording transactions and keeping track of expenses and revenues is turn this data into meaning financial information by presenting it in the form of a balance sheet, income statement, statement of owner's equity, and statement of cash flows. The accounting cycle is a set of steps that are repeated in the same order every period. The culmination of these steps is the preparation of financial statements. Some companies prepare financial statements on a quarterly basis whereas other companies prepare them annually. This means that quarterly companies complete one entire accounting cycle every three months while annual companies only complete one accounting cycle per year. Accounting Cycle Steps This cycle starts with a business event. Bookkeepers analyze the transaction and record it in the general journal with a journal entry. The debits and credits from the journal are then posted to the general ledger where an unadjusted trial balance can be prepared. After accountants and management analyze the balances on the unadjusted trial balance, they can then make end of period adjustments like depreciation expense and expense accruals...
Words: 7143 - Pages: 29
