Question

1)What are the steps in completing the accounting cycle?

2)How do the different steps affect the financial statements?

3)What is the effect on the financial statements of missing a step when completing the accounting cycle?

4)How do these steps play a roll in accrual basis accounting?

Answer 1

1. The eight steps in the accounting cycle, in order, are: transactions, journal entries, posting, trial balance, worksheet, adjusting journal entries, financial statements and closing of the books. ... At the end of the accounting period, a trial balance is calculated as the fourth step in the accounting cycle.

2. Different steps effect the cycle are

Journal entries - recording the transaction

Posting - segregating the entries

Trial balance - totaling all the related accounts

Adjusting entries - to adjust any ommitted entries

Financial statements - to show the results of entire accounting work

3. Effecting the financial statements if any step missed in accounting cycle is confusion between the further step and previous step and there is no clarity for entire process

4.in accrual accounting basis all the steps play an important role to provide best results of accounting cycle. In accrual basis all the above mentioned steps are followed by each other and every step was done in timely manner if any misses it leads to great confusion.