Accounting Cycle Flashcards
What are “events” that affect a company?
-Created by activities categorized as financing, investing, or operating
-May be external or internal
What is step three of the accounting cycle?
Post to the Ledger
How many steps are in the accounting cycle?
seven - AJPPAPC
What is an internal event?
A company’s own action (using a piece of equipment)
What is step four of the accounting cycle?
Prepare a Trial Balance
What is step seven of the accounting cycle?
Close the Accounts
What is step one of the accounting cycle?
Analyze Transactions
What steps of the accounting cycle are done regularly as business occurs, what steps are done at the end of a period?
Steps 1-4 are done as business occurs
Steps 5-7 are done at the end of a period
What must be true of an event to be included in the accounting system?
-must impact a financial statement element (asset, liability, stockholders’ equity, revenue, expense, gain, or loss)
-faithfully represent the event
What is an external event?
Exchanges between the company and an entity outside the company.
Example- issuance of common stock to investors; sale of an item to a customer
What is step two of the accounting cycle?
Journalize Transactions
What is step five of the accounting cycle?
Adjust the Accounts
What is step six of the accounting cycle?
Prepare Financial Statements
