Accounting Cycle PaperEssay Preview: Accounting Cycle PaperReport this essayAccounting Cycle PaperThe accounting cycle is the process of recording, summarizing, and presenting business and financial information. An accounting cycle is generally one month. The entire accounting cycle runs its course during the month. The accounting cycle creates and leaves records that documenting the financial transactions for the period. There are many steps in the accounting cycle. According to the text book there are nine steps to an accounting cycle. The accounting cycle steps consists of analyze and identifying, journalize, posting, prepare unadjusted trail balance, adjusted entries, prepare adjusted trial balance, preparing financial statements, closing, prepare a post-closing trial balance, reversing entries, and financial statements. The accounting cycle steps are discuss within this paper. I cannot relate to and is not familiar with the whole accounting cycle because my main responsible are to process accurate and timely payment of all invoices for the accounts payable department. The information discussed will come from this week reading and information I researched from the web.
The first step of the accounting cycle is identifying and recording of the transaction. In order to record or enter a transactions it must be identify what needs to be recorded first. Example of what would be identified and analyzed to enter a transaction is checks, bank statements, and purchase orders. Once the analyzing is completed the second step occur, which is journalize. A journal is a complete record of each transaction. Journalize are completed by taking the journal entries, assigning each entries to an asset, liability, equity, expense or revenue account or accounts to a debit and credit. I do journal entries at my job but I not sure how they relate to the accounting cycle. I usually do journal entries to correct an account number or cost center. Once the journal is completed the next step is posting. Posting is transferring information from the journal to the ledger. A ledger is a collection of all accounts that shows the number of details about a companys accounts in other words it a summary of each account. I am familiar with how to look at the ledger to see if a journal entry posted to the correct account number. My supervisor review and approve the journal entries before they are post to the ledger. I also use the ledger when a manager inquires about a charges or payment within his or her cost center.
The reminding accounting cycle steps are the ones that I am not fully familiar with. I know the following steps are taken place at my organization, just not familiar what area or person does them. After the posting has taken place the next step is to prepare unadjusted trail balance. An unadjusted trial balance is a list of the accounts with the credit and debit balances with the totals. The totals from both columns must equal. If they are not equal there is an error somewhere that needs to be corrected. Once the unadjusted trail balance completed the next step is adjusting the entries. Adjusting entries bring the account balance to its proper amount and update the revenue or expense account. Adjusting entries are recorded in the general journal and posted to the ledger. All adjusting entries are made at the end of the accounting period. Preparing of an adjusted trial balance is completed once the adjusted entries are done.
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