Module 5 Flashcards
is the series of sequential steps or procedures performed to accomplish the accounting process
Accounting Cycle
the way to make sure that accounting process will be accomplished.
Accounting Cycle
To gather information about transactions or events generally through source documents
Identification of the
events to be recorded
To record economic impact of transactions on the firm in a journal which is a form that facilitates transfer to the accounts
Transactions are recorded in the journal
To transfer the journal to the ledger for classification
Journal Entries are posted to the ledger
To provide a listing to verify the equality of debits and credits in the ledger
Preparation of of Trial Balance
To aid in the preparation of financial statements.
Preparation of Worksheet including adjusting entries:
To provide useful information to decision makers
Preparation of Financial Statements
To record the accruals, expiration of deferrals, estimations and other events from the worksheet.
Adjusting Joumal Entries are journalized and posted
To close temporary accounts and transfer profit to owner’s equity
Closing Journal Entries are journalized and posted
To check the equality of debits and credits after closing entries
Preparation of Post- Closing Trial Balance
To simplify the recording of certain regular transactions in the next accounting period
Reversing Journal Entries are journalize and posted
This step involves identifying a business transaction and analyzing whether or not that transaction affects the assets, liabilities, equity, income or expenses of the business
Step 1: Identification of the events to be recorded
A transaction that has an effect on the accounts
Accountable Event
Needs to be recorded in the books of
account Transactions
Accountable Event
are normally identified from source documents.
Transactions
are the written evidences containing information about the transactions
Source documents
Give 5 Source Document Examples
- Sales invoices
- Official receipts
- Purchase orders
- Bank deposit slips .
- Bank statements
- Checks
-Delivery receipts
-Statement of accounts
is critical and important in accounting cycle. It is an important step to make sure the reliability of information to be processed in accounting.
Analyzing business transactions
After an accountable event is identified and analyzed, the second step is to record it in the journal by means of a journal entry in the recording process called journalizing.
Step 2: Transactions are recorded in the journal
After an accountable event is identified and analyzed, the second step is to record it in the journal by means of a ____________ in the recording process called journalizing.
journal entry
After an accountable event is identified and analyzed, the second step is to record it in the journal by means of a journal entry in the recording process called ______________.
Journalizing
journal entries are recorded in the journal chronologically
Date
under double entry accounting system, each transaction is recorded in the journal in two parts
Account titles
Account titles under double entry accounting system, each transaction is recorded in the journal in two parts
______________ aligned in the left.
✓ Credit account title-indented to the right (to show credit represents right side)
Debit Account Title
Account titles under double entry accounting system, each transaction is recorded in the journal in two parts
Debit Account Title aligned in the left.
_____________ indented to the right (to show credit represents right side)
Credit Account Title
short description of the transaction (to record line)
Explanation
code assigned for each account titles to facilitate the transferring or posting journal entries to ledger
Posting Reference
debit and credit written the same way as account title
Amount
one which contains a single debit and credit element. Same as the
illustration in the previous page
Simple journal entry
one which contains two or more debits or credits Observe the illustration below
Compound journal entry
it is the process of recording journal entry in the joumal
Journalizing
A type of journal entry with one debit and credit account
Simple Journal Entry
A written document evidencing the transaction occurred
Source Document
It is the book of the onginal entry
Journal
it is the short description for a tra
a transaction in a a journal entry
Explanation
This is the first step in the accounting cycle
Identification of events to be Recorded
The arrangement used in recording journal entry following one after another in time
Chronological Order
It is the process of recognition of an event as accountable
Identifying
The code assigned for each account titles to facilitate the transferring or posting journal entries to ledger
Posting Reference
Journal entry which contains two or more debits or credits
Compound Journal Entry
First 5 steps of accounting cycle
- Identification of the events to be recorded
- Transactions are recorded in the journal
- Journal Entries are posted to the ledger
- Preparation of Trial Balance
- Preparation of Worksheet including adjusting entries
The 6 to 10 steps of accounting cycle
- Preparation of Financial Statements
- Adjusting Journal Entries are Journalized and Posted
- Closing Journal Entries are Journalized and Posted
- Preparation of Post-Closing Trial Balance
- Reversing Journal Entries are Journalized and Posted
