Identify and describe each step in the Accounting Cycle.

Solutions

Expert Solution

Accounting Cycle encompasses the entire Accounting procedure beginning from initially identifying accounting transactions to finally preparing the trial balance.

Identifying appropriate financial transactions- Only transactions that have a bearing on business and can be measured in monetary terms are taken into the accounting cycle.
Recording into Journal- Each transaction has two sides viz Debit and Credit. Thus transactions are recorded into Journal at first. Journal is also called the book of original entry.
Ledger posting- The transactions entered into journal are transferred to their respective ledger accounts.
Unadjusted Trial Balance:To ascertain the correctness of debits/credits in posting of entries an unadjusted trial balance is prepared. Errors, if any are rectified by way of correcting entries.
Adjusting Entries: Entries for accrual, prepaid, Outstanding, deferrals, depreciation, allowances etc are made.
Financial statements: After adjusting entries, the next process is that of preparation of financial statements viz. Balance Sheet, Profit &loss account, Cash Flow statement.
Closing entries: These entries are made to various accounts of income/expenses which are temporal in nature by transferring them to Income statement.
Post Closing Trial balance: it contains real accounts only.

ekkarill92 answered 3 months ago

Next > < Previous

Related Solutions

The following are all the steps in the accounting cycle. Number each step in the order...

The following are all the steps in the accounting cycle. Number each step in the order in which they should be done. Please write your answer in the space provided. - Closing entries are journalized and posted to the ledger. - An unadjusted trial balance is prepared. - An optional end-of-period spreadsheet (work sheet) is prepared. - A post-closing trial balance is prepared. - Adjusting entries are journalized and posted to the ledger. - Transactions are analyzed and recorded in...

What are the initial steps in the accounting cycle and what happens in each step ?...

What are the initial steps in the accounting cycle and what happens in each step ? Explain in detail.

Describe the reaction of the citric acid cycle and for each step explain the type of...

Describe the reaction of the citric acid cycle and for each step explain the type of reaction, enzyme involved, substrate and product, if the reaction is reversible or irreversible, any coenzyme or prosthetic group involved, and location.

describe the accounting cycle?

What are the operational steps ofa work cycle? Identify activities and process parameters for each step...

What are the operational steps ofa work cycle? Identify activities and process parameters for each step of the operation.

Which step is your least favorite part of the accounting cycle and why? Which step is...

Which step is your least favorite part of the accounting cycle and why? Which step is your favorite part of the accounting cycle and why? Why do the financial statements need to be prepared BEFORE you journalize and post closing entries?

Describe the five steps of the policymaking process and identify the key actors in each step.

Revenue Cycle Management Data is collected at each step of the revenue cycle, and an error...

Revenue Cycle Management Data is collected at each step of the revenue cycle, and an error or lack of action at any step in the cycle may result in delayed or lost revenue. Discuss three steps in the revenue cycle, explaining what action occurs; provide an example for each step. Describe a negative result, for each of your selected three steps, which may occur if the action is completed incorrectly or not at all. Select one impact, from those you...

What are the steps of the accounting cycle? Describe each in your own words using specific...

What are the steps of the accounting cycle? Describe each in your own words using specific examples.

Describe, in your own words, each of the steps of the accounting cycle. How do individual...

Describe, in your own words, each of the steps of the accounting cycle. How do individual transactions ultimately result in financial statements? What is the general ledger and what is it used for?

Subjects