Xacc/280 Week 6

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Week 6 Checkpoint

The accounting cycle is a series of procedures that allow a company to record their transactions and prepare their financial statements in the most accurate way possible. Every cycle starts with a single transaction and ends with the books being closed out for a specific time period. There are nine steps in all. 1. Analyze Business Transactions – As financial transactions occur they are analyzed and considered with respect to their effect on their financial position in the company. 2. Journalize the Transactions – After collecting and analyzing the financial transactions the information will then be entered into the general journal. 3. Post the Ledger Accounts – The general entries are posted to the general ledger and organized by account. Steps one through three are performed frequently throughout the accounting period. As transactions occur they are constantly being updated. 4. Prepare Trial Balance - Double entry accounting requires that all debits and credits recorded in the general ledger be equal. By preparing an unadjusted trial balance you will be able test the balances and the equality of the debits and credits recorded in the general ledger. 5. Journalize & Post Adjustments – End of period adjustments are required in order to bring the accounts to their proper balance. Once you have reviewed any and all transactions or events not posted yet you will be able to begin the adjustment. Revenue falls under accrual accounting and it is recorded when it is earned and expenses are recorded when they are incurred. In some instances an entry may be required at the end of the period to record any revenue that was earned by not yet posted to the books. With that being said an adjustment may be required to record any expense that may not have been recorded yet. 6. Prepare Adjusted Trial Balance – Adjusting entries are made in your accounting journals at the end of an accounting period. The purpose of adjusting entries is...
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