Question

Assume that you are working in a chosen business as a Financial Accountant and start applying the 9 steps of the accounting cycle in it.

Answer 1

Accounting means recording,classifying,and reporting of business transaction for business.depending on data provided by the financial accountant the managment can take decision. so there are 9 steps which as an accountant I need to follow to provide correct data to managment it is know As accounting cycle .we can see it as follows:

1) To Identify transaction:

As An accountant of any organisation i will start accounting cycle by identifieng Financial transaction of organisation .and analyse the account affected and amount to be recorded.

this transaction includes purchase , sales,expenses,acquisition of assets

2) Journal Entries :

Next step after identifying transaction is, recording transaction in Journal entries in chloronogical order by balancing debit and credit sides.

3) Posting to ledger:

Entries which are recorded in Journal are then posted to ledger.In ledger individual account is Made for each and every transaction.

4)Trial Balance:

   All ledger balance compile in trial balance in debit and credit side.and its total is always equal. main purpose of making trial balance is to ensure the entries made in book-keeping is correct.

Company prepare trial balance periodically,monthly or yearly.depends on company.

5)Worksheet:

When trial balance debit and credit amount is not match then accountant rectify that error by workbook.it is for internal use only no external can see it. worksheet can use for many purpose.like manager to examine the adjusted entries,book keeper and accountant to adjust the entries etc.

6)Entries which are adjusted:

Adjusted Journal entries are those entries which are corrected and identified by accountant on workbook.that entries should belongs to current year eg:unearned revenue, prepaid expenses etc.

7)Financial Statement:

This is important document of your business because it tells financial position of organisation. Investor,Govt,Creditors,Stake holder always see companies financial statement before doing any business deal with company.

Financial statement included Trading A/C,Profit & Loss A/C,Balancesheet,Cash Flow

After adjusting trial balnce entries all the transaction are recorded in financial statement for final result

8) Closing:

This process underatke at the end of the year.it closs business for previouse year ,and carry forward the balances for next year .

9)Post Closing trial balance:

It prepare to show the debit balance and credit balance equility after closing entries are made.

it shows only real accounts

As an accountant i will follow above steps to complete Accounting cycle