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Accounting Cycle: From Filipino Accounting Tutorial (YT)
Accounting Cycle: From Filipino Accounting Tutorial (YT)
Accounting
- Service Activity
- Function to provide information, primarily financial in nature, about economic events that
is intended to be useful in making economic decisions.
Accounting Cycle
- Series of sequential steps or procedures to accomplish the accounting process.
Repeated each accounting period.
Steps
1. Identification of Events to be Recorded
2. Transactions are Recorded in the Journal
3. Journal Entries are Posted to the Ledger
4. Preparations of Trial Balance
5. Preparation of the Worksheet including the Adjusting entries
6. Preparation of Financial Statements
7. Adjusting Journal Entries are Journalized and Posted
8. Closing Journal Entries are Journalized and Posted
9. Preparation of Post-Closing Trial Balance
10. Reversing Journal Entries are Journalized and Posted
● The first 3 steps in the accounting period are accomplished during the period.
● 4th - 9th steps generally occur at the end of the period.
● The last step occurs at the beginning of the next period.
MAY LEGEND
8 9 10 11 12 13 14 STEPS 4 -9
15 16 17 18 19 20 21 STEP 10
22 23 24 25 26 27 28
29 30 31
JUNE
Aim: to gather informations about transactions or events generally through the source
documents
Source Documents
- Transactions and events are the starting points in the accounting cycle.
- By relying on source documents, transactions and events can be analyzed as how they
will affect performance and financial position
- SOURCE DOCUMENTS ARE BASES FOR THE JOURNAL ENTRIES
- These original written evidences contain information about the nature and the amounts
of the transactions.
- Transactions must be supported by a source documents or evidence
Aim: to record the economic impact of transactions on the firm in a journal, which is a form that
facilitates transfer to the accounts.
REMEMBER: DEALER
DEBIT CREDIT
DRAWINGS LIABILITIES
EXPENSES EQUITY
ASSETS REVENUES/INCOME
Posting - transferring the amount from journal to the appropriate accounts in the ledger.
Ledger - grouping of the entity’s accounts
General ledger - “reference book” and used to summarize transactions, and prepare data for
basic financial statements.
Trial balance
- List of all accounts with their respective debits or credits balance.
- Made to verify equality of debits and credits.
- Helps minimize accounting errors.
- Equal means balance.
- Balance is a proof of accuracy, but does not signify the absence of errors.
Income statement - statement showing the performance of the enterprise in a given period of
time. It summarizes the revenues earned and expenses incurred for that period.
- Para malaman kung tumutubo ba ang entity or nalulugi ito
Single statement
Profit(loss) xx,xxx
Profit/Loss xx,xxx
REPORT FORMAT
ASSETS
ACCOUNT FORMAT
Reversing Entry
- exact opposite of a related adjusting entry made at the end of the period
- A bookkeeping technique to simplify the recording of regular transactions in the next
accounting period
Adjusting Entries
DEFERRALS
Accumulated Depre.
ACCRUALS
Income
Payable
WORKSHEET