Accounting Cycle Paper

Topics: Generally Accepted Accounting Principles, Balance sheet, Retained earnings Pages: 2 (723 words) Published: December 9, 2012
Accounting Cycle Paper
There are several steps, people and processes to the accounting cycle. Although I do not have a work experience with the accounting cycle myself but I have learn the basic understanding of how the accounting cycle works in general. The first step in the accounting cycle is identifying and measurement of transactions and other events. One must analysis the transactions and determines what must be recorded. There are guidelines that the GAAP provides for companies to follow (Kieso, Weygandt, & Warfield, 2007). Companies should and need to record all transaction that deal with money even if it is a small amount. The next step is the journalizing the transactions. The company needs to record the transactions that affect its assets, liabilities, and equity. There are several journals to record the transactions in; general journal, cash receipts journal, cash disbursements journal, purchases journal, sales journal, and other special journals. The journal entries are in the form of credits and debits entries to the correct accounts. After journalizing comes posting. Posting is usually done once a month. The journal entries are transferred to ledger accounts. There are four steps: post to debit account, enter debit account number, post to credit account, and enter credit account number. Next, is the trail balance preparation. The trail balance lists the accounts and their balances at the given time (Kieso et al., 2007). Trail balances are usually prepared at the end of the companies accounting period. The accounts are listed in order to the way they are in order in the ledger. Debits are listed on the left column and the credits are listed on the right column. The two columns need to be in agreement. The trail balance has three steps: listing accounts and balances, totaling the two columns and making sure the columns are equal. Adjusting entries are done after the trail balance. Adjusting entries are done at the end of the accounting period....
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