Accounting Cycle
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Transcript of Accounting Cycle
Accounting cycle:
Accounting is the system that identifies records and communicates the information that is relevant, reliable and comparable. And the accounting cycle is 8 series steps which are repeated in every single report period. Accounting cycle starts with analyzing and journalizing the transactions as they were founded. Next step is to adjusting journal entries to general ledger accounts. After that comes the step which is to post the transactions. Next step is to prepare a trial balance sheet. Next is to create a worksheet. Followed by journalizing and posting the adjusted entries. Next step is to prepare a financial statement. Then journalize and closing entries. Final step is to prepare after closing the books.Accounting cycle steps:It has 8 steps which am going to describe each of them separately. Analyzing and journalizing the transactions.
In this step business transaction of some sort happens such as sale or return, a purchase or purchase return of inventory or any other type of transaction. And the Business documents (purchase orders, receipts, invoices, etc.) are created.
Adjust the journal entries to the general ledger accounts. The next step is to list the data in appropriate journal; maintain order time to any transactions. This journal also known as "original book of entry", which is the first place to list transactions.
Post the transactions. In this step the transaction are posted in the account that impacts. Which they are a part of the general ledger account, where you can fine full summary of all the business accounts. Prepare trial balance sheet.
Trial balance sheet is a list of account titles on specific date, which shows all debits and credit in double entry account, with any disagreement including the errors.
Worksheet. The worksheet is an optional step in the accounting cycle; it gives the organization information about results for period of time. Moreover it has 5 sets of DR and CR columns. Many accountants use it to prepare unadjusted trial balance sheet, and then to prepare financial statement. journalizing and posting the adjusted.
DATE PARTICULARS DR RMCR RM
10-Jan
1Cash A/C105,000
To Capital A/C105,000
(Started business)
2Bank A/C90,000
To Cash A/C90,000
(cash deposited into
bank)
3Purchase A/C5,500
To Cash A/C5,500
(Good purchased
for cash
4Purchase A/C2,400
To Eddy A/C800
To Frankey A/C930
To Smith A/C160
To Liew A/C510
(Purchase good on
credit )
5Stationery A/C89
To Bottons A/C89
(Stationery on
credit )
6Tomy A/C170
Eric A/C240
Malcom A/C326
Tim A/C204
To Sales A/C940
(Sold good on
Credit )
8Rent A/C220
To bank A/C220
(Rent paid by
cheque )
10Fixtures A/C610
To Chiefs Bhd A/C610
(Fixture on credit )
11Salaries 790
To cash A/C790
(Salaried paid )
14Franky A/C30
Smith A/C42
(Good return)72
15Van A/C6500
To Bank A/C6500
(Van purchase )
16Bank account A/C2000
To Loan A/C2000
(Received Loan from
Barclay)
18Tomy A/C5
Malcom A/C20
(Good return )25
21Cash A/C145
To Sales A/C145
(Cash sales )
24Eric A/C130
Tim A/C410
Paul A/C158
To Sales A/C698
(Good sold on credit
26Frankey A/C900
Smith A/C118
To Bank A/C1018
(Emma paid the
amount by cheque )
29Bank A/C528
To Paul A/C158
TO Eric A/C370
(Received cheque )
30Cash A/C500
To loan A/C500
(Received loan)
30Cash A/C614
Cash Account
2010 JanRM2010 JanRM
1-JanCapital105,0002Bank90,000
21Sales1453Purchases5,500
30Barclay50011Salaries790
Tim614Balance c/d9,969
106,259106,259
Balance b/d9,969
Capital Account
2010 JanRM2010JanRM
Balance c/d105,0001Cash105,000
105,000105,000
Balance b/d105,000
Bank Account
2010 JanRM2010 JanRM
2Cash90,0008Rent220
16Barclay2,00015Van6,500
29Paul15826Franky900
Eric370Smith118
Balance c/d84,790
92,52892528
Balance b/d84,790
Purchases Account
2010 JanRM2010 Jan RM
3Cash5,500Balance c/d7,900
4Eddy800
Franky 930
Smith160
Leiw510
7,9007,900
Balance b/d7,900
Eddy Account
2010 JanRM2010 JanRM
Balance c/d8004Purchases800
800800
Balance b/d800
Franky Account
2010 JanRM2010 JanRM
14Purchahse return304Purchases930
26Bank900
930930
Smith Account
2010 JanRM2010 JanRM
14Purchases return424Purchases160
26Bank118
160160
Liew Account
2010 JanRM2010 JanRM
Balance c/d5104Purchases510
510510
Balance b/d510
Stationery Account
2010 JanRM2010 JanRM
5Buttons Ldt89Balancec/d89
8989
Balance b/d89
Buttons Ltd Account
2010 JanRM2010 JanRM
Balance c/d895Stationery89
8989
Balance b/d89
Sales Account
2010 JanRM2010 JanRM
Balance c/d17836Tomy170
Eric240
Malcom326
Tim204
21Cash145
24Eric130
Tim410
Paul158
17831783
Balance b/d1783
Tomy Account
2010 JanRM2010 JanRM
6Sales170Balance c/d175
18Purchases return5
175175
Balance b/d175
Eric Account
2010 JanRM2010 JanRM
6Sales24029Bank370
24Sales130
370370
Malcom Account
2010 JanRM2010 JanRM
6Sales326Balance c/d346
18Purchases return20
346346
Balance b/d346
Tim Account
2010 JanRM2010 JanRM
6Sales20430Cash614
24Sales410
614614
Rent Account
2010 JanRM2010 JanRM
8Bank220Balance c/d220
220220
Balance b/d220
Fixtures Account
2010 JanRM2010 JanRM
10Chiefs Bhd610Balance c/d610
610610
Balance b/d610
Chiefs Account
2010 JanRM2010 JanRM
Balance c/d61010Fixtures610
610610
Balance b/d610
Salaries Accaunt
2010 JanRM2010 JanRM
11Cash790Balance c/d790
790790
Balance b/d790
Purchases return Account
2010 JanRM2010 JanRM
Balance c/d9714Franky30
Smith42
18Tomy5
Malcom20
9797
Balance b/d97
Van Account
Date2010 JanRMDate2010 JanRM
15Bank6,500Balance c/d6,500
6,5006,500
Balance b/d
Barclay Account
Date2010 JanRMDate2010 JanRM
Balance c/d2,50016Bank2,000
30Cash500
2,5002,500
Balance b/d2,500
Paul Account
Date2010 JanRMDate2010 JanRM
24Sales15829Bank158
158158
Trail balance of Small Finishing Retailer as on JAN 2010
ParticularsDr accountCr account
Cash account9,969
Bank account84,790
Purchases account7,900
Stationery89
Tomy175
Malcom346
Rent
220
Fixtures and Fittings610
Salaries790
Van6,500
Capital105,000
Eddy800
Liew510
Buttons Ltd89
Chiefs Bhd610
Barclay2,500
Sales1,783
Purchases return97
111,389111,389