What is Accounting?

Question 1

5 Main Activities

Answer 1

1. Gathering info. about the financial activities of the business
2. Collecting permanent records as evidence of financial activities (i.e. proof of payment/details of payroll)
3. Rearrange, summarize, and classify financial info into a more usable form
4. Prepare financial reports to help stakeholders make better financial decisions about business
5. Establish accounting controls to provide accuracy and promote honesty among employees (if an employee takes 5 dollars, a manager will know because it gets recorded when transactions are made)

Question 2

What is Accounting?

Answer 2

The process of organizing financial information for stakeholders to make better decisions. Accounting is the language of business.

Question 3

Accounting Cycle (8 Steps)

Answer 3

1.Transactions Occur
2. Journal
3. Ledger
4. Trial Balance
5. Worksheet
6. Income Statement & Balance Sheet
7. Adjusting & Closing Entries
8. Post Closing Trial Balance
9. Restart the 8 steps

Question 4

How do we use the 8 Steps?

Answer 4

• Accounting procedures occur over a set period of time (FISCAL PERIODS) and resets
• Repeating the Accounting Cycle enables financial information to be compared to make better decisions
• Fiscal Periods usually last 1 year or 12 months (FISCAL YEAR)