Accounting Cycle Paper

Topics: Balance sheet, Generally Accepted Accounting Principles, Income statement Pages: 3 (935 words) Published: December 3, 2012
Accounting Cycle Paper|
Accounting Cycle of Walmart|
Melanie Bartholomew|
September 2, 2012|

When a company, like Walmart, begins to prepare financial statements and reports at the end of an accounting cycle they generally use Generally Accepted Accounting Principles and “the collective process of recording and processing the accounting events” (Definition of ‘Accounting Cycle’, 2012), known as the accounting cycle. There are nine steps involved in the accounting cycle. Walmart would begin the process by collecting and analyzing data from their events and transactions. Next, the company puts those transactions into a general journal. After journalizing their transactions the company posts these entries to the general ledger. The next step in the accounting cycle is to prepare an unadjusted trial balance. Once the unadjusted trial balance is completed the company makes the appropriate adjustments and then prepares an adjusted trial balance. Adjustment entries are made to ensure the company follows revenue recognition and the matching principle and report appropriate assets, liabilities, and owner’s equity at the statement date; and ensure proper reporting of revenues and expenses for the accounting period. This is an important step in the accounting process because the data in the unadjusted trial balance may not be up-to-date and complete. This happens because not all events require daily journalizing and because the company may have some costs that expire with the passage of time and are not yet recorded. Now Walmart is ready to organize the accounts into financial statements and close the books. After this is done the company may decide to prepare a post-closing trial balance to check the accounts. There are many steps and a lot of work involved in preparing financial statements using the accounting cycle, but this methodical set of rules help “to ensure accuracy and conformity of financial statements” (Definition of ‘Accounting...
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