ACCOUNTING PROCESSES and ACCOUNTING CYCLE

Below are the processes in accounting cycle. Cycle means it always starts at the very first process and ends up to the very last steps. And, the accounting processes are then repeated in the following accounting period. 1. Recording and Classifying Aspect a. Recording of Journal Entries in the Vouchers / Source Documents. (Preparation of documentation or source evidential matter) b. Journalizing the business transactions as evidenced by source documents in the books of original entry or Journals. c. Posting the entries from the books of original entry to the books of final entry or Ledgers. 2. Footing the Accounts in the ledgers 3. Preparing the Trial Balance based on the journals and ledger. 4. Compiling and recording adjusting entries. 5. Preparing worksheet or working paper for facilitating preparation of financial statements and closing process. 6. Preparing basic financial statements, supporting schedules and supplementary notes. 7. Journalizing and posting the adjusting entries. 8. Journalizing and posting the closing entries. 9. Balancing and ruling the ledgers. 10. Preparing the post-closing Trial Balance for the purpose of determining the equality of the debit and credit balances after the closing process. 11. Journalizing and posting of reversing entries that are needed in order to facilitate the recording routines for the next accounting period. Illustrative Summary
Accounting Cycle Phase Step No. 1 During the accounting period 2 3 4 5 At the end of the accounting period 6 7 8 At the end of the fiscal year 9 10 Accounting Processes Obtain information about external transactions from source documents. Analyze the transaction. Record the transaction in a journal/book/register. Post from the journal to the general ledger accounts. Prepare an unadjusted trial balance. Record adjusting entries and post to the general ledger accounts. Prepare an adjusted trial balance. Prepare Financial Statements. Close the temporary accounts to retained earnings. Prepare a post-closing trial balance.

References: Intermediate Accounting by Spiceland, Sepe, Nelson. McGrawhill, 2011

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