Acounting cycle

Question 1

The acounting cycle

Answer 1

The process of recording the acounting activities of a business.

Question 2

How long is a financial business year

Answer 2

Twelve months.

Question 3

The seven steps of the acounting cycle

Answer 3

1 - Transaction takes place, 2 - Record information in the source document, 3 - Record in the subsidiary journals, 4 - Record in the general ledger, 5 - Record in the trial balance, 6 - Record in the financial statemnets, 7 - Analyse and interpret financial statements.

Question 4

Transaction

Answer 4

An agreement that occurs between two or more parties.

Question 5

1. Transaction takes place (explain)

Answer 5

When a transaction take place the business must record the activity in the books of the business.

Question 6

What is a source document

Answer 6

Evidence on paper or electrically of the transaction that has occured.

Question 7

2. Record the information in the source document (explain)

Answer 7

They can be in the form of a deposit slip, reciept, cash register roll, bank statement, etc. When the customer buys something they get a till slip and we keep a copy as evidence of the transaction.

Question 8

Subsidiary journals

Answer 8

The first journal the transaction are entered into.

Question 9

Cant delete this slide

Answer 9

:)

Question 10

3. Record in the subsidiary journals (explain)

Answer 10

The subsidiary journals are used to sort Funds in (Cash reciepts journal/CRJ) and Funds out (Cash payment journal/CPJ). We enter the CRJ and CPJ daily, then total them at the end of the month.

Question 11

General ledger

Answer 11

The journal that we record the monthly transactions that occur.

Question 12

4. Record in the general ledger (explain)

Answer 12

At the end of the month we post the transactions from the journals to general ledger, according to the acounting double entry principle. It is entered to individual acounts in the same reference order.

Question 13

Trial balance

Answer 13

A list of closing balances of the general ledger acounts ona certain date.

Question 14

5. Record the trial balance (explain)

Answer 14

A list of closing balances of the general ledger acounts ona certain date, the first step towards the financial statement. We do this to:
- Test the accounting double entry principle
- Chech th debits are equal to credits
- Check the mathematical accuracy
The trial balance is correct when the debits equal the credits. They cannot detect ommisions.

Question 15

Financial statement

Answer 15

A financial is a formal record of the financial position of the businesss.

Question 16

6. Record the financial statement

Answer 16

This relevent information that is presented ina structured form that is easy to understand. They are precise and easy to read for people in and out of the business. This alows the business to plan ahead and make informed decisions for future growth.

Question 17

Income statements

Answer 17

Financial statement that measures a businesses financial performance pver a sertain period. It gives a summary of the businesses operating and non-operating activities. So the income, expense, loss and profit of the business ina period, usually 1 year.

Question 18

Notes to the financial statement

Answer 18

Foot notes, the additional information and other relevent details that was not included in the income statement and the balnce sheet. Notes from the financial satement provides an explanation to the reader of the financial statement about the entries in the income statement and in the balance sheet.

Question 19

Balance sheet

Answer 19

Shows the financial position of a business, summarizing the businesses assets, equity and liablities ona particular date, detailing the balnce of income and expenditure over a setain period. These give readers am idea as to what the business owns and owes and the amount invested by the owner.

Question 20

7. Analysis and interpretation

Answer 20

Financial analysis is the process of taking the financial data and organizing them into a for, revealing the businesses streghts and weaknesses. Thios helps the owners make more informed decisions to increase sales and profit, decrease expenses and debts and make improvements for the next financial year.