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Accounting cycle refers to the progressive sequence of steps involved in compiling an organization’s business transactions in a given accounting period so as to prepare essential financial statements including cash flow statement, balance sheet, income statement and changes in equity. These steps are repeated each reporting period. An accounting cycle begins with the first journal entries of the period and ends with closing of temporary accounts and financial statement publication. Accounting Cycle is explained in a detailed way in Accounting Cycle Case Study Help Online Service.
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Steps of Accounting Cycle Case Study Help:
The steps of accounting cycle explained in Accounting Cycle Assignment Help Online Service are: –
- 1. Analyze and measure transactions:
In this step a business collects all its transactions such as cash sales, purchases: both small and huge along with internal and external transactions. Precisely, a company is required to record as many relevant transactions as possible which affect its financial position. Such transactions are then measured and scrutinized followed by recording.
- 2. Transaction record in journal
Otherwise referred to as journalizing, this step includes the chronological listing of events and transactions into accounts in terms of credits and debits. Each journal entry essentially consists of four parts:
1. The amounts and accounts to be debited.
2. The amounts and accounts to be credited.
3. The transaction date.
4. An explanation of the given transaction.
The transactions carried out can be learnt in detail from Accounting Cycle Assignment Help Online Service.
- 3. Posting of info from journal to ledger
This step is an information transfer step. Posting is required to form a complete record of all accounting transactions in the general ledger. This in turn helps create the financial statement of the company.
- 4. Preparation of an unadjusted trial balance
A list of the accounts and their balances at a particular time, before any alterations or adjustments are done to make the financial statements is the unadjusted trial balance. The accounts must be listed in the same sequence as in the ledger, with debit balances and credit balances listed in left and right columns respectively. The totals of the columns need to be equal.
- 5. Preparation of adjusting entries
Adjusting entries are journal entries that are recorded at the end of an accounting period that change the final balances of different ledger accounts. Such adjustments are required so as to closely match the actual financial position and reported results of a business. Adjusting entries have to follow the principles of revenue recognition.
- 6. Preparation of financial statements
Financial statements are directly prepared from the adjusted trial balance. These are a company’s condition, cash flow and financial results.
- 7. Preparation of Post-closing Trial Balance
A post-closing trial balance only includes assets, liabilities and owner’s equity. This is the proof that the organization has accurately journalized and posted the closing
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