Accounting Cycle Paper 5
Running head: ACCOUNTING CYCLE PAPER
Accounting Cycle Paper
ACC/421 Intermediate Financial Accounting I
University of Phoenix
January 10, 2011
Accounting Cycle Paper When making decisions, businesses must provide and be able to gather relevant and accurate financial information. Being able to gather and understand this information helps companies make the best informed decisions for business operations, which can only benefit the company. When it comes to gathering the information needed, it is pertinent that companies fully understand each step of the accounting cycle. Averkamp (2010) defines the accounting cycle as: “a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries” (p. 1).
The accounting cycle is made op of eight basic steps witch include The basic steps in the accounting cycle are (1) identifying and measuring transactions and other events; (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.
Identifying and measuring transactions and other events The first step in the accounting cycle is determining what information that should be recorded. Kieso, Weygandt & Warfield (2007) explain that items should be recognized if, “it is an element, is measurable, and is relevant and reliable” (p 68). Companies are able to recognize as many dealings as they wish, especially if they feel that these dealings will
Accounting Cycle Paper
ACC/421 Intermediate Financial Accounting I
University of Phoenix
January 10, 2011
Accounting Cycle Paper When making decisions, businesses must provide and be able to gather relevant and accurate financial information. Being able to gather and understand this information helps companies make the best informed decisions for business operations, which can only benefit the company. When it comes to gathering the information needed, it is pertinent that companies fully understand each step of the accounting cycle. Averkamp (2010) defines the accounting cycle as: “a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries” (p. 1).
The accounting cycle is made op of eight basic steps witch include The basic steps in the accounting cycle are (1) identifying and measuring transactions and other events; (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.
Identifying and measuring transactions and other events The first step in the accounting cycle is determining what information that should be recorded. Kieso, Weygandt & Warfield (2007) explain that items should be recognized if, “it is an element, is measurable, and is relevant and reliable” (p 68). Companies are able to recognize as many dealings as they wish, especially if they feel that these dealings will
References: Averkamp (2010) What is the accounting cycle? Accounting Coach, LLC. Retrieved January 9, 2011 from: http://blog.accountingcoach.com/accounting-cycle/ Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate accounting (12th ed.). Hoboken, NJ: John Wiley & Sons. Cram (2011) Adjusting Entries in Accounting – Introduction. The Smartacus Corporation. Retrieved January 10, 2010 from: http://www.college-cram.com/study/accounting/accounting-cycle/adjusting-entries-in-accounting/