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    Accounting Cycle

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    Nissy Nicole Faburada
    The document provides an overview of basic accounting concepts including the accounting cycle, steps in recording business transactions, and key accounting terms. It discusses the 10 steps in the accounting cycle including identifying transactions, recording transactions in a journal, posting to ledgers, preparing trial balances and financial statements, and closing entries. It also defines accounting concepts like general journals, ledger accounts, posting, and trial balances.

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    © All Rights Reserved
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    Accounting Cycle

    Uploaded by

    Nissy Nicole Faburada
    26 views12 pages
    The document provides an overview of basic accounting concepts including the accounting cycle, steps in recording business transactions, and key accounting terms. It discusses the 10 steps in the accounting cycle including identifying transactions, recording transactions in a journal, posting to ledgers, preparing trial balances and financial statements, and closing entries. It also defines accounting concepts like general journals, ledger accounts, posting, and trial balances.

    Original Title

    ACCOUNTING CYCLE

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    The document provides an overview of basic accounting concepts including the accounting cycle, steps in recording business transactions, and key accounting terms. It discusses the 10 steps in the accounting cycle including identifying transactions, recording transactions in a journal, posting to ledgers, preparing trial balances and financial statements, and closing entries. It also defines accounting concepts like general journals, ledger accounts, posting, and trial balances.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    26 views12 pages

    Accounting Cycle

    Uploaded by

    Nissy Nicole Faburada
    The document provides an overview of basic accounting concepts including the accounting cycle, steps in recording business transactions, and key accounting terms. It discusses the 10 steps in the accounting cycle including identifying transactions, recording transactions in a journal, posting to ledgers, preparing trial balances and financial statements, and closing entries. It also defines accounting concepts like general journals, ledger accounts, posting, and trial balances.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    Basic Accounting

    Recording Business
    Transactions
    Steps in The Accounting Cycle
    1. Identification of Events to be Recorded
    2. Transactions are Recorded in the Journal
    3. Journal Entries are Posted to the Ledger
    4. Preparation of Trial Balance
    5. Preparation of the Worksheet including
    Adjusting Entries
    6. Preparation of Financial Statements
    7. Adjusting Journal Entries are Journalized and
    Posted
    8. Closing Journal Entries are Journalized and
    Posted
    9. Preparation of a Post-Closing Trial Balance
    10. Reversing Journal Entries are Journalized
    and Posting

    Accounting Is Fun!
    Steps in the Accounting Process

    • Journalize business transaction:


    – Use source document to record journal entry in general
    journal
    • Decide on accounts that are affected
    • Enter Date
    • Don’t indent debit
    • Indent credit
    • Write description
    • DR = CR
    • Post all journal entries to ledger accounts in general ledger
    – Transfer date
    – Transfer amount
    – Record both cross references
    • Transfer all totals to trial balance

    Accounting Is Fun!
    What Is a General Journal?

    • The book in which a person enters the


    original record of a business transaction
    – Commonly referred to as a book of original entry
    • Chronological listing of all the business
    transactions for the company
    – Each listing records the debits and credits
    associated with that business transaction
    • A book or a location on a hard drive where all
    business transactions are listed
    – Like a diary

    Accounting Is Fun!
    What’s in a Journal Entry?
    1. Date
    2. At least one debit entry
    – Debit account, use exact account title, do not indent
    titles
    3. At least one credit entry
    – Credit account, use exact account title, indent titles
    4. An explanation of the transaction:
    – Check number
    – Invoice number
    – Accounts receivable customer name DR=CR
    – Many other elements…
    – Remember: the accountant must leave a good audit
    trail so that users of accounting information can
    understand what occurred with each transaction

    Accounting Is Fun!
    Accounting Is Fun!
    Example of Business Transaction Recorded
    in the General Journal

    Create a journal entry for each transaction.

    Accounting Is Fun!
    Definitions:

    • Ledger Account
    – Complete listing of business transactions for an
    individual account
    – Where you look if you want to find the balance of
    any given account
    • General Ledger
    – A loose-leaf book or computer file containing all
    the Ledger Accounts
    • Each account from the chart of accounts has its own
    ledger account in the general ledger
    • Posting
    The process of transferring figures from the journal
    to the ledger accounts

    Accounting Is Fun!
    Four-Step Posting Process
    1. Transfer transaction date to account’s date
    column
    2. Transfer the debit/credit amount and
    calculate the new balance
    3. Write journal page number in posting
    reference column of ledger as a cross-
    reference
    4. Go back to journal and write account
    number in posting reference column of
    journal as a cross-reference
    – Cross-reference
    The ledger account number in the Post. Ref.
    column of the journal and the journal page
    number in the Post. Ref. column of the ledger
    account
    Accounting Is Fun!
    Posting Transaction (a): Arch deposited $70,000 in bank
    account in name of business

    Accounting Is Fun!
    Posting Transaction (a): Arch deposited $70,000 in bank
    account in name of business

    Accounting Is Fun!
    Preparing a Trial Balance
    • List the ledger account balances in two columns on the trial
    balance
    – Left column = Debits
    – Right column = Credits
    • Trial balance proves DR = CR

    Accounting Is Fun!

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