Question

You are requested to use your assumed business to prepare an accounting cycle project which include the 9 steps with transactions and workings

i want all steps of accounting cycles with assumed business transactions with working step 1 till step 9

Answer 1

Accounting Cycle is a process of Identifying, Collecting and Summarizing the Financial Transactions of the Business with the objective of generating useful information in the form of three financial statements viz. Income Statement, Balance Sheet and Cash Flow Statements.

The 9 Steps in Accounting Cycle will be:

1. Analyze Business Transaction: Initially the Source Documents are analyzed to determine the nature of Transactions. So that Further Steps can be Achieved. Like Credit Sales Made of 5000. In this Transaction there are two accounts involved as Debtor and Sales. Here Debtor is in nature of Personal Account as he is a Receiver and Sales is in Nature of Nominal Account as income earned.

2. Journalize Business Transaction: Next Step is to do a Journal Entry for recording that Transaction. Like in Previous Example, Journal Entry will be: Debtor A/c Dr. 5000

To Sales A/c 5000

3. Posting into the ledger Account: The next Step is to post that Journal Entry to respective ledgers. Like in the taken Example, Debtor A/c will be shown like this:

Particulars	Amount	Particulars	Amount
To Opening Balance	0	By Sales Returns	0
To Sales A/c	5000	By Receipts	0
		By Closing Balance	5000
Total	5000	Total	5000

and in Sales A/c to the Credit side it goes like

By Debtor 5000

4. Preparing a trial balance: Here, the next step is to prepare a Trial Balance. Like in the taken Example it will be prepared like to match debit equals to credit.

Particulars	Amount	Amount
Debtors	5000
Sales		5000
Total	5000	5000

5. Journalize & Post Adjustments: The Next Step is to Journalize Adjustment entries and their Posting. Like Taxes Accrual . Its Journal Entry will be:

Profit & Loss A/c Dr. 200

To Provision for Income Tax 200

& Provision for Income Tax A/c Dr. 200

To Income Tax Payable 200

and then these entries are posted to their respective ledgers as per Step2.

6. Preparation of Adjusted Trial Balance: After that now Adjusted Trial Balance is Prepared to match Debit Equals to Credit. Like:

Particulars	Amount	Amount
Debtors	5000
Sales		5000
Prov. for Income Tax	200
Income Tax Payable		200
Total	5200	5200

7. Preparation of Financial Statements: The Next Step is to Prepare Financial Statements based on Previous Step. Like Sales(Income) and Prov. For Income Tax (Expense) will go to Income Statement and Debtors ( Asset Side) and Income Tax payable(Liability Side) will go to Balance Sheet.

8. Journalize and Post Closing Entries: Now the Temporary Accounts will closed like Short payment by Debtor of only minimal amount will be Closed by Rebate & Discount Entry like:

Rebate & discount A/c Dr. 5

To Debtor 5

and also Net Profit/loss from Income Statement are transferred to Capital Accounts.

9. Preparing Post Closing Trial Balance: This is to again ensure Debit equal to Credit. For Example, After posting Rebate Entry , Debtor A/c will be 0. Therefore in closing Trial Balance there will be Rebate & Discount in Debit Side and Instead of Debtor , Cash or Bank A/c will take Place.