Explain the overall accounting cycle of an organization.
Include a description of the people, processes, and systems that are integral to the cycle.
Explain the overall accounting cycle of an organization. Include a description of the people, processes, and systems that are integral to the cycle.
What is the accounting cycle? The following is the description of the accounting cycle in an organization.
- Recognize the transaction or other recognizable event.
- Get ready the transaction's source document such as a purchase order or invoice.
- Examine and classify the transaction. Kindly reflect on this: This step involves quantifying the transaction in monetary terms (e.g. dollars
and cents), identifying the accounts that are affected and whether those accounts are to be debited or credited.
- Documentation the transaction by making entries in the appropriate journal, such as the sales journal, purchase journal, cash receipt or disbursement journal, or the general journal. Please reflect on the following: Such entries are made in chronological order.
- Post general journal entries to the ledger accounts.
Please consider the following: The above steps are performed throughout the accounting period as transactions occur or in periodic batch processes. The following steps are performed at the end of the accounting period:
Please consider the following: Organize the trial balance to make sure that debits equal credits. The trial balance is a listing of all of the ledger accounts, with debits in the left column and credits in the right column. At this point no adjusting entries have been made. The actual sum of each column is not meaningful; what is important is that the sums be equal. Note that while out-of-balance columns indicate a recording error, balanced columns do not guarantee that there are no errors. For example, not recording a transaction or recording it in the wrong account would not cause an imbalance.
You should think of the following: Correct any ...
This solution goes step by step through the accounting cycle of an organization describing each process and its purpose. This solution is 1049 words with online references.