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Chapter 2

Accounting cycle (I): Journalizing


posting and preparing Trial Balance
Accounting Cycle
a sequence of accounting procedures which
are repeated continuously during each
accounting period.

Accounting period /fiscal period: any span of


time covering a complete accounting cycle
E.g. a month ,a quarter or half a year, a year

Fiscal year/accounting year: twelve


consecutive months
The
The Accounting
Accounting Cycle
Cycle

Complete a
Journalize work sheet.
Post entries to Prepare trial
transactions.
the ledger balance.
accounts.

Journalize and Prepare


Prepare post-closing Journalize and post adjusting financial
trial balance. post closing
entries. entries. statements.
Steps in Journalizing
Assets
Assets = Liabilities
Liabilities + Equity
Equity

Step 1: Examine
source documents. Step 2: Analyze
transactions.

Step 3: Record
transactions in a
journal.
The
The Journal
Journal

In
In an
an actual
actual accounting
accounting system,
system, transactions
transactions
are
are initially
initially recorded
recorded in
in the
the journal.(
journal.( handout)
handout)
Exercise
Problem 1 on page 53.
Posting
Posting Journal
Journal Entries
Entries to
to the
the
Ledger
Ledger Accounts
Accounts
Posting
involves copying
information from
the journal to the
ledger accounts.
The
The Ledger
Ledger
Accounts
Accounts are
are
Cash individual
individual records
records
showing
showing increases
increases
Accounts
and
and decreases.
decreases.
Payable
The
The entire
entire group
group ofof
Jill Jones, accounts
accounts is is kept
kept
Capital together
together inin an
an
accounting
accounting record
record
called
called aa general
general
ledger( ))
ledger(
Chart of Accounts
A official list of all the accounts and their
account numbers
1. The first digit indicates the major account
classification
2. The second digit indicates financial
statement classification
3. The third digit indicates detailed account
classification
Posting
Sorting out and copying the information from
the journal to the ledger account.
Posting
Posting Journal
Journal Entries
Entries to
to the
the
Ledger
Ledger Accounts
Accounts
Posting
Posting Journal
Journal Entries
Entries to
to the
the
Ledger
Ledger Accounts
Accounts
Cross reference
3) Insert the page number of the journal in
the posting reference column of the ledger
account
4) Insert the ledger account number in the
posting reference column of the journal
Example on page 45
Ledger
Ledger Accounts
Accounts After
After Posting
Posting

This
This ledger
ledger format
format is
is referred
referred to
to as
as aa
running
running balance
balance (as
(as opposed
opposed to to simple
simple
TT accounts).
accounts).
Steps in Processing
Transactions
Assets
Assets = Liabilities
Liabilities + Equity
Equity

Step 1: Examine
source documents. Step 2: Analyze
transactions.

ACCOUNT NAME: ACCOUNT No.

Date Description PR Debit Credit Balance

Step 5: Prepare a Step 4: Record the Step 3: Record


trial balance. journal information in a transactions in a
ledger. journal.
Exercise
Problem 1 on page 53.
End
End of
of Chapter
Chapter 22