Accounting Cycle Steps

In: Business and Management

Submitted By dancerzmom
Words 784
Pages 4
The accounting process starts by analyzing transactions and source documents that describe transactions and events. Examples of source documents are bank statements, checks and purchase orders. After we have analyzed the transactions, events and source documents, we are ready for the next step, journalizing. Journalizing is the process of recording a transaction in the journal. To do this we 1) record the date of the transaction in the date column, 2) the title of the account to be debited is recorded at the left hand margin under the description column, and the amount to be debited is entered in the debit column, 3) the title of the account to be credited is listed below and to the right of the debited account title, and the amount to be credited is listed in the credit column,4) a brief description may be entered below the credited account, 5) the Posting Reference column is left blank when the journal entry is initially recorded, when transferring to the ledger, this column will be utilized. In double entry accounting the debits must equal the credits.

The second step in the accounting cycle is to post. When posting we transfer the debits and credits from the journal to the ledger. This is done by 1) the date of the journal entry is entered in the date column, 2) the amount is entered into the debit column for the correct posting title, 3) the journal page number is entered in the Posting Reference column and 4) the account number is entered in the Posting Reference column in the journal. In step three we need to verify that the debits and credits transferred from the journal to the ledger are equal, an unadjusted trial balance is prepared. When preparing an unadjusted trial balance we 1) list the name of the company, the title of the trial balance, and the date the trial balance is prepared, 2) list the accounts from the ledger ad enter their debit or…...

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