POA 04

• STEPS IN ACCOUNTING CYCLE (LECTURE)

  • ANALYZING
  • JOURNALIZING
  • POSTING TO LEDGER
  • TRIAL BALANCE
  • WORKSHEET
• TWO KINGS OF ENTRY:

  • SIMPLE ENTRY AND COMPOUND ENTRY
• Step 1

  • Identification of Events to be Recorded
  • Aim: To gather information about transactions or events generally through the source documents.
• Step 3

  • Journal Entries
  • Aim: To transfer the information from the journal to the ledger for classification.
• Step 4

  • Preparation of a Trial Balance
  • Aim: To provide a listing to verify the equality of debits and credits in the ledger.
• Step 2

  • Transactions are Recorded in the Journal
  • Aim: To record the economic impact of transactions on the firm in a journal, which is a form that facilitates transfer to the accounts.
• Step 5

  • Preparation of the Worksheet including Adjusting Entries
  • Aim: To aid in the preparation of financial statements
• Step 6

  • Preparation of the Financial Statements
  • Aim: To provide useful information to decision-makers.
• Step 7

  • Adjusting Journal Entries are Journalized and posted
  • Aim: To record the accruals, expiration of deferrals, estimations and other events from the worksheet.
• Step 8

  • Closing Journal Entries are journalized and posted
  • Aim: To close temporary accounts and transfer profit to owner’s equity
• Step 9

  • Preparation of a Post-Closing Trial Balance Aim: To check the equality of debits and credits after the closing entries
• Step 10

  • Reversing Journal Entries are Journalized and Posted Aim: To simplify the recording of certain regular transactions in the next accounting period.
• Source Documents

  • identify and describe transactions and events entering the accounting process. These original written evidences contain information about the nature and the amounts of the transactions
• Journal

  • Is a chronological record of the entity’s transactions. A _ entry shows all the effects of a business transaction in terms of debits and credits.
• TRIAL BALANCE

  The _ _is a list of all accounts with their respective debit or credit balances. It is prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated.
• Posting means transferring the amounts from the journal to the appropriate accounts in the ledger
• Ledger

  A grouping of the entity’s accounts is referred to as a _. A _ _ is the “reference book” of the accounting system and is used to classify and summarize transactions, and to prepare data for basic financial statements.
• Chart of Accounts

  A listing of all the accounts and their account numbers in the ledger is known as the _ _ _.