Question 1

What is an Accounting Cycle?

Accepted Answer

It represents the steps or procedures used to record transactions and prepare financial statements. The accounting cycle implements the accounting processes of identifying, recording, and communicating economic information.

Question 2

1. Identifying and analyzing business documents or transactions

Accepted Answer

This is the process of identifying and analyzing the transactions to be recorded through the business documents. The accountant gathers information from source documents and determines the effect of the transactions on the accounts.

Question 3

2. Recording transactions in the journal

Accepted Answer

This is known as journalizing. The identified accountable events are recorded in the journals.

Question 4

3. Posting journal entries to the ledger

Accepted Answer

This is known as posting. It is the process of transferring the information found in the journal into the book of final entries known as the ledger.

Question 5

4. Preparing the trial balance

Accepted Answer

The trial balance is a list of accounts found in the ledger together with the account’s balance or total. This is proof that for every debit, there is a corresponding credit. Hence, it is also a proof that the ledger is in balance.

Question 6

5. Preparing the adjusting entries

Accepted Answer

The accounts are updated as of the reporting date on an accrual basis by recording accruals, expiration of deferrals, estimations, and other events often not signaled by new source documents.

Question 7

6. Preparing the worksheet

Accepted Answer

The worksheet is a common tool used by accountants to assemble on a sheet of paper all the information needed to prepare the financial statements, adjusting entries, and the post- closing trial balance.

Question 8

7. Preparing the financial statements

Accepted Answer

These are the means by which the information processed is communicated to users.

Question 9

8. Closing the book

Accepted Answer

Closing entries are prepared at the end of the accounting period to update the owner’s capital account. This will also eliminate the balances of the nominal accounts so that they may be ready for the next period.

Question 10

9. Preparing the post-closing trial balance

Accepted Answer

The equality of debits and credits are again rechecked after the closing process.

Question 11

10. Recording of reversing entries

Accepted Answer

Reversing entries are prepared to simplify the accounting process. The adjusting entries are simply reversed on the first day of the accounting period. Not all adjusting entries are reversed, only accruals and deferrals that use the nominal balance.

Question 12

10. Recording of reversing entries

Accepted Answer

Reversing entries are prepared to simplify the accounting process. The adjusting entries are simply reversed on the first day of the accounting period. Not all adjusting entries are reversed, only accruals and deferrals that use the nominal balance.

Question 13

It is a chronological record of events or business transactions showing all the effects of each transaction in terms of debits and credits.

Accepted Answer

Journal

Question 14

What is journalizing?

Accepted Answer

After an accountable event is identified and analyzed, the second step is to record it in the journal by means of a journal entry.

Question 15

Journal entries are recorded in the journal ______________.

Accepted Answer

chronologically

Brainscape's Knowledge GenomeTM

#3.3 : Accounting Cycle - Journal, Ledger & Trial Balance Flashcards

Brainscape's Knowledge Genome^TM