Basic Accounting 101

Topics: Generally Accepted Accounting Principles, Income statement, Financial statements Pages: 3 (277 words) Published: March 7, 2013
BASIC ACCOUNTING CYCLE SUMMARY

Accounting is…
- a service activity.
- its function is to provide quantitative information, - primarily financial in nature
- about economic entity
- that is intended to be useful in making economic decision.

Accounting is also defined as…
- an “ART” of:

a. Journalizing – Books of Original Entry Journals
▪ General Journals ▪ Cash Receipt Journals ▪ Sales Journals
▪ Cash Disbursements Journal ▪ Purchase Journal

b. Posting – Books of Final Entry
General Ledger

▪ Subsidiary Ledgers

c. Preparation of the Unadjusted Trial Balance – Contains both Real / Permanent and Nominal / Temporary Accounts d. Preparation of the Adjusting Journal Entries e. Preparation of the Adjusted Trial Balance– Contains both Real / Permanent and Nominal / Temporary Accounts f. Preparation of the Financial Statements

▪ Statement of Financial Position or Balance Sheet - (Real / Permanent Accounts) ▪ Statement of Changes in Capital / Stockholders Equity / Retained Earnings ▪ Cash Flow Statement ▪ Statement of Income or Income Statement - (Nominal / Temporary Accounts) ▪ Notes to Financial Statements

g. Preparation of...
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