Accounting Cycle Essay

799 words - 4 pages

11/17/2013
The Accounting Cycle
AC114

Accounting has three basic activities; it identifies, records, and communicates the numbers to the interested parties of the company. The internal users who rely on accounting information are the people who plan, organize, and run the business. The most common external users that rely on the accounting information are investors and creditors, because neither of the two would invest into a business with inaccurate accounting information. To ensure accuracy we have to follow the accounting cycle which has nine steps.
The first step is to analyze the business transactions because it identifies the economic events relevant to its business. When we ...view middle of the document...

When the trial balance is calculated we would have to journalize the adjusting entries of the company.
Adjusting entries are necessary because the trial balance may not be up to date or complete. So adjusting entries will convert a company’s records to the accrual basis of accounting. In the accrual basis of accounting, companies would record transactions that change a company’s economic events in the periods in which they occur. After the adjusting entries are posted to a ledger we would then create an adjusted trial balance, because we have to calculate the adjustments within the accounting period.
From the trial balance we separate the amounts into financial statement. Financial statements are necessary because financial statements tell you the performance and the value a company, it helps you measure the company, and it will help you manage your company when you can no longer be hands on with all the details. Included in the financial statement are the income statement, owner’s equity statement, and the balance sheet. The income statement calculates service revenue and all the expenses from the adjusted trial balance. The balance sheet calculates all the assets, liabilities, owner’s capital, and owners drawing. When we total the debit and credit of these two financial statements if the debit is more than the credits then it is a net loss and if vice versa then there is a net income. Owner’s equity statement will calculate any investments made into the company as...

Other Papers Like Accounting Cycle

Business Essay

547 words - 3 pages Running head: AUNT CONNIE’S COOKIES Aunt Connie’s Cookies ACC/561 March 29, 2011 Tony Guice Aunt Connie’s Cookies How Aunt Connie’s Cookies could use cost accounting systems to determine their product costs Aunt Connie's Cookies can use customary cost accounting if they apply a mix of the labor and material costs, and apply expenses to each product. It assumes that more cookies baked could cause more overhead expenses. This is

Article Essay

7284 words - 30 pages (IMAPs). The problem of the existing ineffective costing system was resolved by the development of innovative management accounting principles such as: target costing, activity-based costing, activity-based budgeting, theory of constraint, back flush costing and product life-cycle costing (Uyar, 2010). The need for IMAPs was even more urgent when examined against the relevance of the existing traditional volume-based cost allocation system which

A Report Of Environmental Cost On High-Speed Railway

1694 words - 7 pages , but these methods are extremely complex and require a lot of detailed information。It does not apply to the conceptual design phase; or just the simple sum of the cost of the product life cycle, so it can not correctly reflect environmental costs. Australia's S. Kara and S. Manmek, gave an integrated approach to estimate the external environmental costs, their comprehensive the SLCA (Simplified Life Cycle Assessment) model and EV (Economic

Harnischfeger Corporation

4382 words - 18 pages Harnischfeger Corporation Teaching Note INTRODUCTION The purpose of the "Harnischfeger Corporation" case is to expose students to the managerial motives for making major financial reporting policy changes. Generally accepted accounting principles (GAAP) allow companies wide latitude in the choice of accounting policies. After a firm chooses a set of accounting policies, current accounting rules permit changes from one alternative

Environmental Reporting

5970 words - 24 pages , Life Cycle Costs and other descriptive costs, all in an attempt to emphasize the inadequacy of conventional approaches because they have not accorded recognition to environmental costs. Whereas, traditional costs classifications in accounting are: Direct materials and labour Manufacturing or factory overheads, i.e. operating costs other than direct material and labour, Sales overheads, General and Administrative (G &A), and Research

Account

4440 words - 18 pages as possible. For some, the idea of spreadsheets, general journal books and ledger sheets is frightening. For these people, computerised accounting could be a welcome relief. The two biggest advantages of a computerised accounting system are speed and accuracy. When using a manual accounting system, each step in the accounting cycle must be performed by hand. With a computerised accounting system, the steps are completed with one entry. The

Proposal Of Controls For Inflows

1897 words - 8 pages controls include: • Inventory Planning • Production • Cost Accounting • Custody • Segregation of Duties The production cycle of business concerns accounting for all inventories as it goes from raw materials to works in progress to the result of finished goods. Production also requires tracking of accurate costs of the inventory items a company produces. The production cycle key components are cost accounting allocations, unit cost

The Greed Cycle

1280 words - 6 pages The article “The Greed Cycle” is an in depth look of the advancements in the ways business compensates its heads of industry. The article links the trend of corruption among executives when there was lax regulation, and methods of fixing numbers. The question that is purposed by the article is if greed comes naturally; or if it is an evolution that corporate America creates. It is true that the creation of Sarbanes-Oxley has significantly

Revenue Cycle Audit Objectives

507 words - 3 pages batch may prevent the remaining downstream records from being processed 3. Access Controls * Prevent and detect unauthorized and illegal access to the firm’s assets. Inventories and cash are the physical assets of the revenue cycle. OUTPUT CONTROLS * Designed to ensure that information is not lost, misdirected, or corrupted and that system processes function as intended. EXPENDITURES CYCLE PURCHASES AND CASH DISBURSEMENT PROCEDURES

Managerial Accounting

2279 words - 10 pages |Name of Course |Managerial Accounting | |Course Code |EBF 2043 | |Credit hours |3

Financial Reporting

6334 words - 26 pages , SSAP, GAAP and ASB). Furthermore, I calculate accounting ratio consisting of Solvency, Profitability, Capital Gearing, Dividend Yield, Assets to assess the performance and position of Vinamilk and then prepare a report incorporating and interpreting accounting ratio, compare against the previous year, regional and also local competitors. This report provides an analysis and evaluation of the current and prospective profitability

Related Essays

Accounting Cycle Essay

365 words - 2 pages Accounting Cycle Description Paper Riordan Manufacture Inc. Accounting Process Team C Acc. /340 Cito Vanegas July 29, 2014 Introduction Riordan Manufacturing Inc. is a leader in their industry which is plastic injection molding. This company could not manually accounting due to the company's wide span corporation. Manually is very time consuming and it is tedious for the high production that Riordan does and services. Riordan

Accounting Ppt Essay

650 words - 3 pages Introductory Accounting TOPIC: What is Accounting Lecture 2: The Accounting Cycle COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by and on behalf of the University of New South Wales pursuant to Part VA of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under this Act. Any further copying or communication

The Role Of Accounting To Business And Society

980 words - 4 pages of deposits from clients or receiving direct payment after the services are provided. These service activities might take place in more than one accounting cycle, or just the same accounting cycle. (McIntosh, 2014) On the other hand, merchandizing companies usually purchase inventories and then resell them to customers. Financial transactions in this industry include purchasing, inventory, storing it and selling it to clients. These activities

Accounting Essay

614 words - 3 pages earned or recorded and expenses that have been made but not yet recorded. This process is fourth step in the accounting cycle, which happens at the end of the accounting period after the trial balance is done. After the adjusting entries are journalized and posted and adjusted trial balance is done, from there the financial statements are prepared. Adjusting entries can vary significantly across companies, they happen because the exchange of