Acc 421 Week 1 Accounting Cycle Paper
Accounting Cycle
ACC/421
Accounting Cycle A typical accounting cycle is made up of eight steps which include the following; (1) identifying and measuring transactions; (2) journalizing; (3) posting; (4) preparing an unadjusted trail balance; (5) making adjusting entries; (6) preparing an adjusted trial balance; (7) preparing financial statements; (8) closing. Identifying and Measuring Transactions Invoices that are received are reviewed and proper coding is implemented. Proper coding consists of deciding which department the particular invoice belongs to. For example, office paper would be applied as office expense and a computer would be allocated to assets. Journalizing When journalizing a transaction …show more content…
I always ask myself what accounts will be effected. Such as which accounts will be debited and which accounts will be credited. I also question which journal the transaction will be recorded in. There are five journals: General Journal, Sales Journal, Purchase Journal, Cash Receipts Journal, and Cash Payments Journal. Posting When posting any transaction to the General Ledger account, maintaining a complete and accurate audit trail is very important. The Journal and the Ledger must always balance. Unadjusted Trial Balance In my organization, we as processors input all transactions and the Director of Finance is the one who prepares the trial balance.
The trial balance provides proof that all of the totals debits and credits end balances in the general ledger are equal.
Adjusting Entries The next step is making all the necessary adjusting entries. Some of these entries might be supplies, prepaid insurance, wage & salary expenses, unearned revenue, fees earned, accounts receivable and depreciation expenses. Adjusted Trail Balance Following the adjusting entries another trail balance is prepared to show all the adjusted entries. Prepare Financial Statements One of the last steps in the accounting cycle is preparing financial statements. This includes the Income Statement, Owner’s Equity or Stockholder’s equity, Balance sheet which includes assets, liabilities, capital or stockholders equity, and the Statement of Cash Flow which discloses the operating, investing and financial activities. Closing The final step in the accounting cycle is when we physically close the month. Closing of the cycle is executed when every transaction has been coded, allocated, and adjusted. And so the next cycle
begins!
References Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2012). Intermediate accounting (14th ed). Hoboken, NJ: Wiley.
ACC/421
Accounting Cycle A typical accounting cycle is made up of eight steps which include the following; (1) identifying and measuring transactions; (2) journalizing; (3) posting; (4) preparing an unadjusted trail balance; (5) making adjusting entries; (6) preparing an adjusted trial balance; (7) preparing financial statements; (8) closing. Identifying and Measuring Transactions Invoices that are received are reviewed and proper coding is implemented. Proper coding consists of deciding which department the particular invoice belongs to. For example, office paper would be applied as office expense and a computer would be allocated to assets. Journalizing When journalizing a transaction …show more content…
I always ask myself what accounts will be effected. Such as which accounts will be debited and which accounts will be credited. I also question which journal the transaction will be recorded in. There are five journals: General Journal, Sales Journal, Purchase Journal, Cash Receipts Journal, and Cash Payments Journal. Posting When posting any transaction to the General Ledger account, maintaining a complete and accurate audit trail is very important. The Journal and the Ledger must always balance. Unadjusted Trial Balance In my organization, we as processors input all transactions and the Director of Finance is the one who prepares the trial balance.
The trial balance provides proof that all of the totals debits and credits end balances in the general ledger are equal.
Adjusting Entries The next step is making all the necessary adjusting entries. Some of these entries might be supplies, prepaid insurance, wage & salary expenses, unearned revenue, fees earned, accounts receivable and depreciation expenses. Adjusted Trail Balance Following the adjusting entries another trail balance is prepared to show all the adjusted entries. Prepare Financial Statements One of the last steps in the accounting cycle is preparing financial statements. This includes the Income Statement, Owner’s Equity or Stockholder’s equity, Balance sheet which includes assets, liabilities, capital or stockholders equity, and the Statement of Cash Flow which discloses the operating, investing and financial activities. Closing The final step in the accounting cycle is when we physically close the month. Closing of the cycle is executed when every transaction has been coded, allocated, and adjusted. And so the next cycle
begins!
References Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2012). Intermediate accounting (14th ed). Hoboken, NJ: Wiley.