The Accounting Cycle
The Accounting Cycle
The Accounting Cycle is a series of steps for the processing of financial transactions in an accounting period. These financial transactions occur daily or periodically to be included in the financial statements of the company. The steps in an accounting cycle are listed below. 1. Analyze the transactions as they occur in the company. 2. Recording the information in the appropriate journals. 3. Positing debits and credits from the journal entries to the general ledgers. 4. Adjusting the assets through the use of the Trial Balance. 5. Preparing the financial statements.
6. Closing of temporary accounts.
Liberty Tax Service is a nationwide tax preparation and advisement company. Liberty Tax Service uses the accounting cycle to efficiently produce accurate financial statements through employees, systems and processes. Analyzing Data
The first steps in the accounting cycle are to analyze and collect data from daily events and transactions. Liberty Tax collects preparer’s tax returns to analyze and double check for accuracy. An invoice is collected each time a tax return is completed. All invoices are analyzed with how they will affect the financial position of the company. At the end of the day, all invoices, credit card totals, and, cash totals are recorded and sent to the corporate office. This procedure is completed by the Office supervisor or the assistant manager. Recording of transactions
The next step in the accounting cycle is to record the transactions. This is usually completed the next morning at Liberty Tax Service. The Office Supervisor or Assistant Manager collects all invoices and records each transaction in a general journal. Credit card transactions, Refund Anticipation Loans (RAL), check, and cash transactions are recorded in the appropriate journal. This allows the company to keep track of how customers are paying for their tax returns. The RAL’s are not paid until the return...
Please join StudyMode to read the full document