Running Head: ACCOUNTING CYCLE PROCESS Page 1 Dan Partello June 13, 2015 Milestone one: Accounting Cycle Process ACC-201-Q5353 Financial Accounting 15EW5
Running Head: ACCOUNTING CYCLE PROCESS Page 2 Accounting Cycle Process Any given Company, Organization or a business should have accountants that are well advanced with the accounting cycle process. Accounting cycle is simply the process of recording and processing the accounting procedures of any given company. The accountant must be very knowledgeable with the accounting cycle and he or she should be liable for any mistake made as a result of accounting error. The steps start with the transaction and ends with the financial statement. The process is a cycle due to its circular accounting process which entails entering transaction, calculating the transaction, closing the accounting books and lastly beginning the accounting cycle afresh in the new financial year or fiscal year. There are eight basic steps namely; 1.Transaction This process include the transaction from the sales, returns of any product, purchase or other activities in a company such as payoff or any deposit from a pay off that involve transaction. The company may also sell its asset or buy an asset. All these transaction should be recorded well with no error. 2.Journal entries Transaction should be kept in a journal following the transaction order and all the relevant transactions should be recorded in the journal. 3.Posting All the transaction should be posted to the account and a clear records should be kept in the ledger book.
Running Head: ACCOUNTING CYCLE PROCESS Page 3 4.Trial balance Trial balance should be calculated at the end of any transaction period which could be monthly, quarterly or yearly. The accountant should calculate the trial balance sheet with no error and with a high accuracy. 5.Worksheet In order to identify any slight error, the accountant should use a worksheet after calculating the trial balance. Any changes should be made in the worksheet and depreciation of assets should be considered. 6.Adjusting journal entries Accountants are expected to make any correction and adjustments in all their entries. The trial balance should be adjusted and the changes should be adjusted in the journal as well. 7.Financial Statements A balance sheet should be prepared after all the correction has been made. The income statement and the balance sheet are very important and should be prepared. 8.Closing the books All accountants should close the books of the revenue and accounts and start preparing a new cycle with zero balances in any given account.