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Important information about The steps in the accounting cycle

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ACG230-0803B-09 Introduction to Accounting

Details: Select a company you are familiar with.

Explain each step of the accounting cycle. Describe at least one transaction that would occur at the company you selected in each of these steps.

Objective: Explain the steps in the accounting cycle.

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The Accounting Process (The Accounting Cycle) The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. Because this process is repeated each reporting period, it is referred to as the accounting cycle and includes these major steps:

1. Identify the transaction or other recognizable event.
2. Prepare the transaction's source document such as a purchase order or invoice.
3. Analyze and classify the transaction. 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.
4. Record 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. Such entries are made in chronological order.
5. Post general journal entries to the ledger accounts.

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:

6. Prepare the ...

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This solution discusses the steps in the accounting cycle in 644 words.

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