business

• The accounting cycle is a collective process of identifying, analyzing, and recording the accounting events of a company.
• To prepare accounting records, it is essential that a particular sequence of events and processes is followed, often referred to as the accounting cycle.
• The term cycle is used because the sequence of activities is continuous.
• The steps of the accounting cycle include collecting source documents, extracting key facts and recording in the books of original entry, posting information to ledger accounts, preparing a trial balance to check the accuracy of the double entry, and preparing end of year financial statements.
• A source document is the original document that contains the details of a business transaction.
• The Books of original entry usually refers to the accounting journal, where you record any business transaction that occurs at a firm initially.
• A ledger in accounting refers to a book that contains different accounts where records of transactions pertaining to a specific account is stored.
• A ledger is a book where all transactions either debited or credited are stored.
• A trial balance is a list of the debit and credit balances of accounts in a double-entry ledger at a given date.
• Financial statements are written records that convey the business activities and the financial performance of a company.
• The accounting cycle is a collective process of identifying, analyzing, and recording the accounting events of a company.
• In order to prepare accounting records, it is essential that a particular sequence of events and processes is followed, often referred to as the accounting cycle.
• The term cycle is used because the sequence of activities is continuous.
• The steps of the accounting cycle include collecting source documents, extracting key facts and recording in the books of original entry, posting information to ledger accounts, preparing a trial balance to check the accuracy of the double entry, and preparing end of year financial statements.
• A source document is the original document that contains the details of a business transaction.
• The Books of original entry usually refers to the accounting journal, where you record any business transaction that occurs at a firm initially.
• A ledger in accounting refers to a book that contains different accounts where records of transactions pertaining to a specific account is stored.
• A ledger is a book where all transactions either debited or credited are stored.
• A trial balance is a list of the debit and credit balances of accounts in a double-entry ledger at a given date.
• Financial statements are written records that convey the business activities and the financial performance of a company.
• Accounting is a system of collecting,

  organizing, reporting and interpreting

  information about those activities of

  businesses that can be described in

  money terms. These activities are

  called transactions.
• The aim of business whether small or large is to be successful by making a profit.

  To achieve this, it is imperative that it practices sound management

  techniques: 


  Employs competent and skilled staff

  Purchases and sell goods

  Manages the finances of the business
• Bookkeeping is the process of recording financial transactions.

  It involves keeping track of income, expenses, assets, and liabilities.

  Bookkeeping is the foundation of accounting.
• Purpose of accounting

  Accounting will provide accurate and comprehensive financial information to those responsible for running a business.

  Accounting helps them make decisions that will support its survival and success.
• A transaction is an event that affects a business's financial position.

  Examples of transactions include buying inventory, selling products, and paying expenses.
• Internal users are individuals within a business who need accounting information to make decisions.
• External users are individuals or organizations outside the business who use accounting information to evaluate the business performance.
• Customers are dependent on the success of the business to ensure that the goods or services they wish to buy are good quality and available when they are needed.
• Suppliers will be concerned that the business can pay for goods or services on time and about the possibility of repeat and growing orders.
• Government/Tax authorities will want to know the profit being made by the business so that accurate tax assessments can be made
• Internal users and managers, owners and investors of the business and employees.
• Owners and investors of business will have invested personal savings in a business and be dependent on the success of the business (for example profits survival) for his or her livelihood
• Managers will be concerned about the performance of the business and will wish to identify any weaknesses and problems so that steps can be taken to rectify these and to capitalize on business opportunities.
• Employees dependent on the success of the business for job security, increases in pay and promotion opportunities .