Chapter 3 Accounting Cycle & Preparation of Financial Statement

Question 1

What are the three accounting phases?

Answer 1

1. Recording Phase
2. Adjusting Phase
3. Closing Phase

Question 2

What happens in the recording phase?

Answer 2

1. Obtain information about external transactions from source documents
2. Analyse transactions
3. Record transactions in a journal
4. Post journal entry to general ledger accounts

Question 3

What happens in the adjusting phase?

Answer 3

1. Prepare an unadjusted trial balance
2. Record adjusting entries and post them to the general ledger accounts
3. Prepare an adjusted trial balance
4. Prepare financial statements

Question 4

What happens in the closing phase?

Answer 4

1. Close the temporary account to retained earnings account

2. Prepare a closing trial balance