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Accounting Cycle

In: Business and Management

Submitted By soyyo74
Words 834
Pages 4
Accounting Cycle
Yesenia Arroyo
AC114
June 24, 2014
Dr. Tonjua McCullough

Accounting Cycle I. Introduction II. Accounting in Action a. Identify b. Record c. Communicate III. Accounting Cycle d. Analyze Transactions e. Journalize the Transactions f. Post to Ledger Accounts g. Prepare a Unadjusted Trial Balance h. Journalize and Post Adjusting Entries i. Prepare an Adjusted Trial Balance j. Prepare Financial Statement k. Journalize and Post Closing Entries l. Post-Closing Trial Balance m. Optional Reversing Entries IV. Conclusion

While not having an accounting cycle for the business can possibility hurt the company, following the accounting process and steps will help with the accounting procedure. Many organizations will have accounting established to process all the business revenues and expenses. To have a successful business people follow the accounting actions of identify, record and communicate the daily transactions of the company. After the actions are completed then the company will go through the process of the accounting cycle. There is a ten step accounting cycle that business owners can go threw to show the revenues and expenses. Collect data, analyze the transactions, record transaction to journal, post from journal to ledger, prepare unadjusted trial balance, record adjusting entries to ledger, prepare adjusted trial balance, prepare financial statement, close temporary accounts, and lastly post-closing trial balance.
Accounting in Action Accounting is a system that businesses use for all of the revenue transactions and for all of the expenses made in the business. Accounting process is not only use in private businesses but in big corporations. There are different opportunities in accounting for example, bookkeepers, public accountant (tax preparer, auditor), and controller.
Identify
In the accounting process a person will need to identify the data of events for the company. For example, transaction that occurs in the organization that involves information of financial activity related to a particular transaction is considered to be fall under identifying accounting.
Record
Recording is to keep track of all transactions in a chronological order of event in an orderly and systematic manner. Recording can help the business in making sure that all accounts are being debited correctly as well as crediting correctly. For example, paying a utility bill the accountant will need to apply the debit and credit to the right accounts for that utility bill.
Communicate
Communication cannot happen without identification and recording. In this part of the accounting process the accountant will be able to communicate the transactions in a accounting report. For instance, the business accountant can present to the owner or investors financial statements on all the accounts that was identified and recorded for that period.
Accounting Cycle To better understand the accounting system and how it works accountant will need to comprehend the accounting cycle. Comprehension of analyzing transaction, journalizing the transactions, post to the ledger accounts, prepare unadjusted trial balance, journalizing and post adjusting entries, prepare adjusted trial balance, prepare financial statement, journalizing and posting closing entries, and the optional thing to comprehend would be the reversing entries.
Analyze Transactions The accounting process starts with the identifying and analyzing the transactions and events in the company. The only transactions that are analyzed are those that pertain to the business unit. For example, is the owner gone on vacation and not a business trip then that will not be analyze and recorded under the business accounting process.
Journalize the Transactions To journalize in the accounting process means to keep a book or electronic system for all transaction recorded. According to the online article (Accounting Verse, 2014), “to simplify the recording process, special journals are often used for transactions that recur frequently such as sales, purchases, cash receipts, and cash disbursements.”
Post to Ledger Accounts Once the journal has all the transaction entered now the information can transfer to the ledger. The ledger is another book or electronic that records all the accounts the business may have. These accounts are divided into number and class depending on the transaction. For instance, if the entered transaction was for cash then all the cash entries will show in the Cash account in the ledger.
Prepare Unadjusted Trial Balance Preparing the unadjusted trial balance is getting all the accounts in one sheet. Here all the debit transaction and all the credit transaction will need to total the same amount. As per Rebekiah Hill (Hill, 2014) article, “an unadjusted trial balance is a trial balance that is prepared before adjusting entries are made into accounts.”
Journalize and Post Adjusting Entries Prepare an Adjusted Trial Balance
Prepare Financial Statement
Journalize and Post Closing Entries
Post-Closing Trial Balance
Optional Reversing Entries
Conclusion

References
Accounting Verse. (2014). The Accounting Cycle: 9-Step Accounting Process. Retrieved from http://www.accountingverse.com/accounting-basics/accounting-cycle.html
Hill, R. (2014). Accounting Cycle: Definition, Steps & Process. Retrieved from http://education-portal.com/academy/lesson/accounting-cycle-definition-steps-process.html#lesson
Weygandt, J. H., Kimmel, P. D., & Kieso, D. E. (2012). Accounting Principles (10th ed.). Danvers, MA: John Wiley & Sons, Inc..…...

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