Tutorial work - accounting cycle PDF

Preview

Summary

ACCOUNTING CYCLE...

Description

ACCOUNTINGCYCLE–INMOREDETAIL  STEP1–ANALYZETRANSACTIONS  Questionstoaskyourself: 1. Whichaccountsareaffected? 2. Howaretheseaccountsaffected?i.e.salesincrease,accountreceivablesincreases 3. Whataretheappropriatecreditanddebitentries?i.e.creditforsales,debitforaccounts receivables 4. Whatistheamounttoberecordedinthejournalentry? a. Whichformulatouse? 5. Isthereanyotherinformationrelevanttothetransaction? a. Ifso,howdoesitaffectthetransaction?Howdoesisaffectfuturetransactions?i.e. adjustingentries b. Makeappropriatenotedisclosures.  STEP2‐PREPAREJOURNALENTRY   Topreparethejournalentry: 1. Writetheaccount(s)tobedebitedfirstalongwiththeamount. 2. Below,writetheaccount(s)tobecreditedslightlyindented.  Forexample: DRAccountsreceivables 1500 CR Revenues  1500  STEP3–POSTTOT‐ACCOUNTS Î RecordamountsinjournalentriesontoeachcorrespondingT‐account Î MakesuretoplaceallcreditsontheRIGHTsideanalldebitsontheLEFTsideoftheT‐account Î Posttransactionsinchronologicalorder.Thiswillalsohelpensurethatalltransactionsare posted. (Itmaybehelpfultomakeamarkontheaccount toensurethatnonehavebeenleftoutor repeated) STEP4–PREPARETRIALBALANCE 1. 2. 3. 4.



FindendingdebitandcreditbalancesbytotalingT‐accounts. Placecompanyname,trialbalanceanddateatthetopofthepage. Have3columns,oneforaccountnames,onefordebitbalancesandoneforcreditbalances. ListaccountandtheircorrespondingbalancesinorderofAssets,Liabilities,Equity,Revenues andfinallyExpenses....