1.3: The Nature Of Accounting

Question 1

1. The Accounting Cycle

Answer 1

1. Transaction occurs
2. Transactions recorded in journal
3. Journal Entries posted to ledger accounts
4. Trial balance and interim financial statements prepared
5. Work sheet prepared
6. Formal financial statements prepared
7. Ledger accounts adjusted and closed
8. Post-closing trial balance prepared

Question 2

2. What are the 3 Major Accounting Fields

Answer 2

1. Private Accounting: an accountant working for a private organization like Canadian Tire
2. Public Accountant: an accountant working for a public accounting firm or setting up their own business to work for the public
3. Government and non-profit organizations: an accountant working for the government or other non-profit organization such as a school.

Question 3

3. How do the roles of an accountant clerk and an accountant differ?

Answer 3

The roles of an accountant clerk are clerical in nature mostly concerned with routine matter such as:
• ensuring transactions are properly recorded with supporting documents
• Recording the accounting entries in the book of accounts and balancing the ledger
• making payroll calculations, payroll cheques and other payroll records
• carrying out all necessary banking transactions

The work of an accountant is broader in scope and requires more education and experience. It involves:
• developing a system to ensure that correct data are entered into the accounting system
• ensuring that generally accepted accounting standards are met
• interpreting data produced by the accounting system
• preparing reports based on data
• participating in management meeting
• supervising the work of all accounting employees.