Question

Students should select one of the steps in the accounting cycle (process) and explain what occurs in that step and the importance of what the accounting step is. For example, students may select the preparation of the adjusted trial balance and explain how it is prepared and why the adjusted trial balance is prepared.

Answer 1

Answer

Accounting Cycle is the basic process which helps the book keeper to understand that how the transaction is record, analysis & report to the end user of the financial statement

Accounting Cycle involve 8 Steps which are as follows:

1. Identify Transaction

2. Record Transaction in Journal

3. Posting

4. Unadjusted trail Balance

5. Worksheet

6. Adjusted journal Entry

7. Financial Statement

8. Closing The Books

There is the brief understanding of the step 2 i.e. Record transaction in Journal is as follow:

Second Step in Accounting Cycle include recording Transaction in journal, it is a process of creating journal entry which knows as recording of financial events occur in the business entity. The Journal entry is come from French in which JOUR is known as Day i.e. record day to day transaction. Journal entry is base for the financial statement which adopt double entry book keeping for their accounting

There is some importance of journal entry which are as follows:

· Its helps in record transaction as soon as occur so for the small business there is very low chance that any transaction get ignored.

· Its helps in find the accounting data very easily as the journal entry is record as chronologically and it is easy to get any transaction as there is date mention on it of the day in which that event occur

· It not just helps in record transaction but they also provide information about the whole story behind the transaction event

· Ensures mathematically accuracy of the transaction as all the debit is always equal to the credit entry

· Journal entry includes all the details it is not important to add those details in ledger again. Which makes ledgers concise and Tidy

· It in the Furthers Steps like ledger or trial balance you find any mistakes then you can go back tp journal entry to find such mistakes