Question

List and explain each phase of the accounting cycle and briefly state how a computerized system can help with each phase.

(3 pages) Specifications: Assignment should be an APA paper, double spaced, 12 font, 1 inch margin (top, bottom, left and right), and at least three (3) sources.

Answer 1

Accounting cycle is process of all accounting events of an organisation as a whole. Accounting cycle starts with a transaction and ends with financial statements.

1. Business Transaction: Accounting Cycle starts with a business transaction where money or any monetary benefit is involved. hence it won't be classfied as an transaction.

2. Recording Journal Entries: Journal Entries are record of a transaction in the accounting records. they are recorded in chronological order. Transaction must have a debit and a corresponding credit. Computerized system will help us to record in chronogical order and it also helps us in maintaining that record.

3 . Ledgers: Once the Journal entries have been posted , Ledgers would be prepared of all induvidual accounts with their respective credits & Debits. Once they are entered in Computerized system, they cannot be changed or altered . Only authorized people are allowed to change or edit.

4.Trial Balance: Once the induvidual accounts have been posted in their repsective Ledgers. The Ending balance is transffered of all accounts and prepared a statement called Trial Balance. Trial Balance is the total balance of all accounts that had been prepared. Computetized accounting system will help the trial balance to tally. In other words, Debit is equal to credit.

5. Creating Financial Statements: Once the trial balance is prepared, This will lead to Preparing all the financial statements. like Profit & loss account, income statement , cash flow statement and the balance sheet. Computerized system will assit us in mainitaining the accuracy of the numbers and ensure no changes takes place without proper authorization.

6. Closing Entries: Once the accounting year is ended. all the closing entries will be passed. . Temporary balance are reduced to zero. . the blances at the end will form opening balance for the next year.