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Accounting 1411

Ka Xiong. Accounting 1411. 10 Accounting Cycle Steps. Transactions are analyzed and recorded in the journal. Transactions are posted to the ledger. An unadjusted trial balance is prepared. Adjustment data are assembled and analyzed.

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Accounting 1411

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  1. Ka Xiong Accounting 1411

  2. 10 Accounting Cycle Steps • Transactions are analyzed and recorded in the journal. • Transactions are posted to the ledger. • An unadjusted trial balance is prepared. • Adjustment data are assembled and analyzed. • An optional end-of-period spreadsheet (work sheet) is prepared. • Adjusting entries are journalized and posted to the ledger. • An adjusted trial balance is prepared. • Financial statements are prepared. • Closing entries are journalized and posted to the ledger. • A post-closing trial balance is prepared.

  3. Journal Entries • After analyzing, transactions are posted to the Journal: • Transactions are recorded in date order when the transactions take place. • Title of account debited are listed in the description to the left-hand margin, the amount debited are listed in the Debit column • Title of account credited are listed in the description to the right of the debited account title, and the amount credited are listed in the Credit column. • A brief description may be entered below the credit account. • Indicated in the Post. Ref. (Posting Reference) by number are the accounts being effected. * Made and shown on 1.

  4. Ledger Postings • After the journal entries it’s time to post to the ledger: • Accounts are listed in the order in which they appear in the financial statements. • Balance accounts: assets, liabilities, and then owner’s equity. • Income statement: revenues and then expenses • Accounts transactions are in date order • Post. Ref. column indicates page location of transaction. • Debit and credit columns indicates increases and decrease of the account. • Debit and Credit column balances indicates the balances of each account after a transaction has been debited or credited to that account. * Made and shown on 2.

  5. Unadjusted Trial Balance • After posting to the ledger: • Listed the name of the company, the title of the trial balance, and the date the trial balance was prepared. • Listed the accounts from the ledger and entered their debit or credit balance in the Debit or Credit column of the trial balance. • Totaled the Debit and Credit columns of the trial balance. • Verified that the total of the Debit column equals the Credit column. * Made and shown on 3.

  6. Adjustment Data • Assembled and analyzed: • Optional end-of-period spreadsheet (work sheet) is prepared (made and shown on page 8) * You can make your financial statements using the end of-the-period spreadsheet. • Posted to the journal and follow the prior steps. • Post to the ledger and follow the prior steps. * Adjusted journal entries and the adjusted ledger postings are made and shown on 2and 6.

  7. AdjustedTrial Balance • After adjusted data have been journalized and posted to the ledger: • Prepare the Adjusted Trial Balance. • Listed the name of the company, the title of the trial balance, and the date the trial balance was prepared. • Listed the accounts from the ledger and entered their debit or credit balance in the Debit or Credit column of the trial balance. • Totaled the Debit and Credit columns of the trial balance. • Verified that the total of the Debit column equals the Credit column. * Made and shown on 7.

  8. Financial Statements:Income Statement, Statement of Owner’s equity, and Balance Sheet • Income Statement: • Fees earned-expenses = net income • Statement of Owner’s Equity: • Beginning owner’s capital + additional investments (net income= which was calculated in the Income Statement) – owner’s drawing = ending owner’s capital • Balance Sheet: • Total assets = liabilities + owner’s equity (which was calculated in the Statement of owner’s Equity) Current Assets: cash, accounts receivable, supplies, and prepaid accounts Property, Plant, and Equipment (assets): any account equipment, land, and Less accumulated depreciation. Liabilities: payable accounts and unearned accounts Owner’s Equity: Company, Capital ( which was calculated in the Statement of owner’s Equity) * All these financial statements are shown on 8.

  9. ClosingEntries • Closing temporary accounts (revenue and expenses) into the Income Summary account, drawing straight into the owner’s capital: • Post closing entries to the journal and then post to the ledger. • Post-Closing Trial Balance is prepared * Closing entries are on 9 and Post-Closing trial Balance is on 10.

  10. Conclusion • The financial statements relate to one another. • The ledger is in balance at the beginning of the year. • Temporary accounts are zeroed out.

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