June 18, 2012
The Accounting Cycle
The accounting cycle is a process that normally uses accounting procedures to record transactions and prepare financial statements of a company. The accounting cycle is made up of nine steps: Journalizing, posting, trial balance, adjusting entries, adjusted trial balance, preparing financial statements, closing, post-closing trial balance, and reversing entries. This presentation will include a description of the people, processes, and systems that are integral to the cycle for Starbucks Coffee Company.
Starbucks Corporation has become one of the top producers of speciality food corporations in the world. With that said, Starbucks follows the full process of the accounting cycle to prepare financial statements for the company. The first step in the cycle is analysis of transactions and selected other events. Even though GAAP provides guidelines, there is no requirement of which events a company should record. Changes in a company’s accounting policies are important, and Starbucks Corporation should record all cash sales or purchases no matter how small the transaction is.
The next step in the accounting cycle is journalizing. Starbucks Corporation records in accounts those transactions and events that affect its assets, liabilities, and equities. The general ledger holds all the asset, liability, and stockholders’ equity accounts (Kieso, Weygandt & Warfield, 2010). To have a complete record of each transaction or other event in one place, Starbucks uses a journal. A general journal lists transactions and other events, expressed with debits and credits to accounts (Kieso, Weygandt & Warfield, 2010). Starbucks enters debits first, followed by the credits (slightly indented).
After journalizing, posting would be the next step. Posting is the procedure of transferring journal entries to the ledger accounts (Kieso, Weygandt & Warfield,...