Accounting Cycle

Question 1

Accounting periods

Answer 1

Artificial time periods of equal length so that the users of the accounting statements can make meaningful comparisons of operating results of the current period with those of earlier periods

Question 2

The accounting cycle

Answer 2

The accounting cycle is the process of identification and gathering preparing and record analysing and reporting the activities of the business during the accounting period so that business and other decisions can be made

Question 3

What are the steps for the accounting cycle

Answer 3

Collect

• cheque book
• deposit books
• direct from bank statement

Record: bank statements

• cash book
• journal sheets
• accounting software package

Classify and store
- ledger accounts

Summarise report
- trial balance all documents above

Interpreting

• profitability
• financial stability
• solvency
• managerial efficiency