What are the steps in completing the accounting cycle? Discuss the relationship between the amounts on the adjusted trial balance for an account and its ledger? Discuss the relationship of the adjusted trial balance and the amount on the financial statements? What is the effect on the financial statements of missing a step when completing the accounting cycle?
There are nine steps to completing an accounting cycle which are:
ϖ Analyze business Transactions
ϖ Journalize the Transactions
ϖ Post to ledger accounts
❖ Prepare a trial balance
❖ Journalize and post adjusting entries: Prepayments/Accruals
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I have put them alphabetical order. In what order should they be created and why?
I am so glad you posted this explination of reversing entries beacsue this one had me a bid confused. I was think that reversing entries were the process of replacing (correcting) entries from the previous reporting period. For instance, i was thinking that is you estimate a costs and enter that estimation at the beginning of a reporting period and at the end of the reporting period, you did not have that expenditure, for example, you would reverse the previous entry extimate.
I am learing quite a bit, but as we go along further it gets a bit more complicated.
This class has remined me of a time some years ago when I applied for an Accountant position with the City I worked for at the time. I only applied to brush up on my interviewing skills, not because I wanted a job in accounting. Well I came out the #1 candidate after the interview and sat across from the Finance Director during the selection interview trying to figure out how I got there. I could not answer ANY of the questions from the first oral panel.
The Finance Director said the panel of Accounting professionals said about me "she doesn't know a thing about accounting, but she is bright and we could teach her. She would be a joy to have in our office." Needless to say they were half right. I don't know a think about accounting (still true today), but I would be a joy to have around....lol.
What are reversing entries? Why are reversing entries needed? What would be the effect if not made? What are the pros and cons of using reversing entries? What types of transactions may require reversing entries?
Reverse entries are an elected process in accounting that occurs during the beginning of an accounting period, but adjusts entries from the previous accounting cycle. Reverse entries are used to adjust some of the entries before recording transactions within the next accounting cycle....