State the steps involved in the process of
accounting.
14 mar
Answers
Answer:
Step 1: Identify Transactions
The first step in the accounting cycle is identifying transactions.
Step 2: Record Transactions in a Journal
The second step in the cycle is the creation of journal entries for each transaction
With double-entry accounting, each transaction has a debit and a credit equal to each other.
Step 3: Posting
Once a transaction is recorded as a journal entry, it should post to an account in the general ledger.
Step 4: Unadjusted Trial Balance
At the end of the accounting period, a trial balance is calculated as the fourth step in the accounting cycle.
Step 5: Worksheet
A worksheet is created and used to ensure that debits and credits are equal.
Step 6: Adjusting Journal Entries
In the sixth step, a bookkeeper makes adjustments. Adjustments are recorded as journal entries where necessary.
Step 7: Financial Statements
These statements will include an income statement, balance sheet, and cash flow statement.
Step 8: Closing the Books
Finally, a company ends the accounting cycle in the eighth step by closing its books at the end of the day on the specified closing.
After closing, the accounting cycle starts over again from the beginning with a new reporting period.