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What is accounting cycle? What is its relationship with operating cycle? In the steps to compile...

  1. What is accounting cycle? What is its relationship with operating cycle?
  2. In the steps to compile financial statements, explain a few accounts that are more likely to be used to link these financial statements.

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Expert Solution

The 8 Steps of the Accounting Cycle

  1. Step 1: Identify Transactions. ...
  2. Step 2: Record Transactions in a Journal. ...
  3. Step 3: Posting. ...
  4. Step 4: Unadjusted Trial Balance. ...
  5. Step 5: Worksheet. ...
  6. Step 6: Adjusting Journal Entries. ...
  7. Step 7: Financial Statements. ...
  8. Step 8: Closing the Books.

relationship with operating cycle

Information on business transactions obtained within each operating cycle ensures proper accounting recording in their related accounting cycle. Business transactions within an operating cycle may become more complex when a company purchases inventories at different times, allow various accounts receivable collection schedules or accrue other operating expenses in addition to trade accounts payable. Without regular and effective communication between business and accounting people, accounting records from the current accounting cycle may not accurately reflect the ever-changing business transactions that take place in each of the operating cycles.

few accounts that are more likely to be used to link these financial statements.

1. DEBTOR

2. CREDITOR

3.INVENTORY

4.SALE

5.DIRECT & INDIRECT EXP ETC.

jeff jeffy answered 1 year ago
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