ACCOUNTING CYCLE

ACCOUNITNG CYCLE
1.ANALYZING
2.RECORDING
4.SUMMARIZING



ACCOUNTING
CYCLE




a. POSTING
b.TRIAL BALANCE

IS A PROCESS
FOR
3.CLASSIFYING
a. ADJUSTING
ENTRIES
b. ADJUSTED TRIAL
BALANCE
c. FINANCIAL
STATEMENTS
d. CLOSING
e. POST CLOSING
TRIAL BALANCE
ADJUSTING ENTRIES ADJUSTING ENTRIES ADJUSTING ENTRIES PREPARATION OF ADJUSTED TRIAL BALANCE
OF BUSINESS
TRANSACTIONS
?
?

ACCOUNITNG CYCLE
ANALYZING
HOW BUSINESS TRANSACTIONS AFFECT THE ACCOUNITNG EQUATION
Determine what type of account is
involved.
Determine what items increased or
decreased and by how much.
Source documents, such as a sales slip, a check, a
bill, or an invoice, provide evidence of the
transaction.
ASSET
LIABILITY
REVENUE
EXPENSE
EQUITY
$ INCREASE
$ DECREASE
DEBIT
CREDIT
ASSET= LIAB +OWNERSEQUITY
ACCOUNITNG CYCLE
2. RECORDING / JOURNALIZING
BOOKS OF ORIGINAL ENTRY/ JOURNAL
ENTERING TRANSACTION DATA IN THE
JOURNAL
GENERAL JOURNAL SPECIAL JOURNALS
PURCHASE JOURNAL
SALES JOURNAL
CASH JOURNALS
CONT..
FORMAT
DATE
ACCOUNT TITLE
POST REF
DEBIT
CREDIT
FIVE COLUMNS
ACCOUNITNG CYCLE
GENERAL JOURNAL
DATE ACCOUNT TITLE POST
REF
DEBIT CREDIT
Journalizing - Entering transaction data in the journal.
SO 4 Explain what a journal is and how it helps in the recording process.
Illustration: On September 1, Ray Neal invested $15,000 cash in
the business, and Softbyte purchased computer equipment for
$7,000 cash.
Account Title Ref. Debit Credit Date
Cash
Owners, Capital

Sept. 1 15,000
15,000
General Journal
Equipment
Cash
7,000
7,000
Illustration 2-13
Steps in the Recording Process
ACCOUNITNG CYCLE
3.a POSTING
TRANFERRING JOURNAL ENTRIES TO
LEDGER ACCOUNTS
LEDGER/
GENERAL LEDGER
THE ENTIRE GROUP OF ACCOUNTS
MAINTAINED BY A COMANY
3. CLASSIFYING
GROUPING TRANSACTIONS OF SAME
NATURE AT ONE PLACE
Cont..
Account Name
Debit / Dr. Credit / Cr.
Record of increases and decreases
in a specific asset, liability, equity,
revenue, or expense item.
Debit = Left
Credit = Right
Account
An Account can be
illustrated in a T-
Account form.
SO 1 Explain what an account is and how it helps in the recording process.
The Account
ACCOUNITNG CYCLE
Standard Form of Account
ACCOUNITNG CYCLE
Accounts and account numbers arranged in sequence
in which they are presented in the financial statements
ACCOUNITNG CYCLE
Chart of Accounts
ACCOUNITNG CYCLE
3.b TRIAL BALANCE
LIST OF ACCOUNTS AND THEIR BALANCES
AT A GIVEN TIME
PURPOSE IS TO
CHECK THE EQUALITY
OF DEBITS AND
CREDITS AFTER
POSTING
ACCOUNITNG CYCLE
Limitations of a Trial Balance
The trial balance may balance even when
1. a transaction is not journalized,
2. a correct journal entry is not posted,
3. a journal entry is posted twice,
4. incorrect accounts are used in journalizing or posting, or
5. offsetting errors are made in recording the amount of a
transaction.