7 key Steps in the Accounting Process Every Business Need to Know

1. 7 key steps in theAccounting Process Every Business Need toKnow

2. 02 To understand and properly execute allthe necessary steps in the accounting cycle the companies are advised to enlist the services of the best accounting& bookkeeping firms in theUAE. PARSH ACCOUNTING AND BOOKKEEPING| 02

3. The AccountingCycle 03 TheprocessofaccountingiscrucialforeverysuccessfulcompanyintheUAEandthebusinessneedsto have a proper accounting process within the organization. The financial statements of the company present an accurate picture over a Financial period. The steps in the accounting cycle help the businessesinpresentingaclearviewofthefinancialhealthoftheorganization. PARSH ACCOUNTING AND BOOKKEEPING|

4. The Accounting Cycle: The Key Steps in the Accounting Process

5. Identifying andAnalyzing BusinessTransactions 05 Analyzing the transactions is the first yet crucial step in the whole accounting process. The companiesneedtoidentifytheaccountsthatare affectedbythetransactions.Theprocessinvolves analyzing source documents like the purchase orders, invoices, loan agreements, receipts, etc. that are the evidence or records for business transactions in the company. The companies should avoid mixing personal and business transactions.

6. Posting Transactionsin Journals Thenextstepintheaccountingcycleisjournalizing the transactions. The outsourced accounting firms in the UAE can make sure that all the financial information pertaining to the business has been recorded in the journal. This process is complete withusingthedouble-entrysystemofbookkeeping, where the transactions are recorded in debit and credit accounts. The journal carries the date and descriptionandnameofthepayeeandpayerofthe transactions.

7. Posting from Journalto Ledger The financial information recorded in the journalbook,bothdebit,andcredit,nowput intotheledger.Theledgerisalsoreferredto as the book of final entry and it shows the company’s accounts and the changes it underwent due to various business transactions.Allthedebitandcreditjournal cash transactions will be transferred to the cashledger.

8. Recordingadjusting entries The accountants in the UAE at this stage will record the adjusting entries to update the accounts before summarizing them in the financialstatement.Theentrieswill be journalized and posted to the ledger.

9. Preparing the adjustedtrial balance After the new entries are created, the businessesgottocalculateanewtrialbalance tocheckifthedebitsareequaltothecredits. it is an important phase in the accounting cycle where an accounting firm starting to prepare for the financial statements of the company. and any error detected in the adjusted trial balance needs immediate correction.

10. Preparingfinancial statements Thefinancialstatementsofcorporationsarestatementssuch as: IncomeStatement BalanceSheet Cash flow Statement Posting closingentries Theaccountingperiodends,thetemporaryaccountsareclosed or reduced to zero. These include expenses, income, and withdrawal accounts. It must be noted that the closing entries aremadefortemporaryaccountsandnotforpermanent

11. Post-Closing TrialBalance Aftertheclosingofthetrialbalance,thebook now consists only of permanent entries like assets,liabilities,andowner’sequity.Thisstep makes sure of the proper closure of revenue and expense accounts. It also aims to ensure that total debit and credit are equal. the businesses have to be compelled to recheck thebookagainforerrorsandcorrectthem.

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