NAME: JULIUS M.

TAGUBILIN DATE: MARCH 03, 2023

SUBJECT: PARTNERSHIP AND CORPORATION
ACCOUNTING
INSTRUCTOR: MIRAFLOR ELIZALDE
ASSIGNMENT 2

I. Explain the accounting cycle these are the 10 steps in the accounting process.

The accounting cycle is a series of steps followed by businesses to record, classify, and
report financial information accurately. The ten steps involved in the accounting cycle
are as follows:

1. Documentation: This is the first step in the accounting cycle, and it involves the
collection and organization of financial transactions in a systematic manner.
2. Journalizing: In this step, the transactions collected in the documentation phase
are recorded in the general journal, which is a chronological listing of all
transactions.
3. Posting: After the transactions are recorded in the general journal, they are
posted to the respective accounts in the general ledger.
4. Preparation of trial balance: At the end of an accounting period, a trial balance is
prepared to ensure that the total debits equal the total credits.
5. Compilation of data for adjustments: In this step, the necessary adjustments are
made to the accounts to ensure that the financial statements accurately reflect
the financial position of the business.
6. Preparation of worksheet end of period spreadsheet: The worksheet is a tool
used to organize the data and facilitate the preparation of financial statements.
7. Preparation of reversing: This step is optional, and it involves the reversal of
certain adjusting entries made at the end of the previous period.
8. Preparation of post-closing trial balance: After the closing entries are made, a
post-closing trial balance is prepared to ensure that all temporary accounts have
been closed and the balances are transferred to the retained earnings account.
9. Journalizing and posting of adjusting and closing entries: In this step, the
adjusting and closing entries are recorded in the general journal and posted to
the respective accounts in the general ledger.
10. Preparation of financial statements: Finally, the financial statements are prepared,
which include the statement of financial position (balance sheet), statement of
comprehensive income, statement of cash flows, and statement of changes in
equity. These statements provide a summary of the financial position and
performance of the business for the accounting period.
II.THE FOLLOWING ARE SOME OF THE USERS IN FINANCIAL INFORMATION AND
THE USE OF SUCH INFORMATION IN THE DECISION THAT THEY MAKE.

1. Investors: Investors are interested in financial information to make informed

investment decisions. They use financial statements such as the balance sheet, income
statement, and cash flow statement to assess the financial health of a company and
make decisions about whether to buy, hold, or sell its stock.
2. Lenders: Lenders use financial information to assess a company's ability to repay
loans and to determine the terms and conditions of the loan. They may review
financial statements, cash flow projections, and other financial ratios to evaluate a
company's creditworthiness and assess the level of risk involved in lending money to
the company.
3. Suppliers and other trade creditors: Suppliers and trade creditors use financial
information to assess a company's ability to pay its bills and to determine whether to
extend credit to the company. They may review financial statements, payment
history, and other credit information to evaluate a company's creditworthiness and
assess the level of risk involved in extending credit.
4. Employees: Employees may use financial information to assess the financial
stability of the company and to make decisions about whether to accept a job offer
or remain with the company. They may also use financial information to negotiate
salary and benefit packages.
5. Customers: Customers may use financial information to assess the financial
stability of the company and to make decisions about whether to purchase products
or services from the company. They may also use financial information to assess the
level of risk involved in doing business with the company.
6. Government and their agencies: Government and their agencies use financial
information to assess the tax liabilities of the company, to determine eligibility for
government programs, and to regulate the company's operations. They may also use
financial information to assess the impact of the company's operations on the
environment, public health, and safety.
7. Public: the public can use financial information to make informed decisions about
investments, borrowing, and other financial activities. By accessing and analyzing financial
information, individuals can evaluate the financial health and performance of companies and
make decisions about investing or borrowing.
III. RECORDING FACE PHASE
DOCUMENTATION
JOURNALIZING
POSTING

The Recording phase in the accounting cycle consists of three steps: documentation,
journalizing, and posting.

1. Documentation: This is the first step in the recording phase, where financial
transactions are documented or recorded in an organized and systematic
manner. The source documents for financial transactions include sales invoices,
purchase receipts, cash receipts, bank statements, and other relevant documents.
2. Journalizing: In this step, the financial transactions documented in the previous
step are recorded in the general journal in a chronological order. Each transaction
is analyzed to determine the accounts involved and the amounts to be debited
and credited.
3. Posting: In this step, the information recorded in the general journal is transferred
or posted to the respective accounts in the general ledger. The general ledger is
a collection of all the accounts used by the company, including assets, liabilities,
equity, revenues, and expenses. Each account in the ledger is assigned a unique
account number and is used to track the changes in the account balance.

Overall, the recording phase is crucial in the accounting cycle, as it forms the foundation
for preparing financial statements and other reports. Accurate and timely recording of
financial transactions ensures that the financial statements reflect the true and fair view
of the company's financial position and performance.

IV. SUMMARIZING PHASE

PREPARING TRIAL BALANCE
COMPILING ADJUSTING DATA

The Summarizing phase in the accounting cycle consists of two steps: preparing the trial balance
and compiling adjusting data.

1. Preparing the trial balance: In this step, all the account balances in the general ledger are
listed and summarized in a trial balance. The trial balance is a report that shows the total
 debits and credits for each account and is used to ensure that the total debits and credits
are equal. If the total debits and credits do not balance, it indicates that there may be
errors in the recording phase, and corrective actions need to be taken.
2. Compiling adjusting data: In this step, adjustments are made to the accounts to ensure
that the financial statements reflect the true and fair view of the company's financial
position and performance. Adjustments may be necessary for accruals, deferrals,
depreciation, bad debts, and other items. These adjustments are made through adjusting
journal entries, and the adjusted balances are reflected in the general ledger.

Overall, the Summarizing phase is essential to ensure the accuracy and completeness of financial
statements. The trial balance helps to identify any errors in the recording phase, while the
adjustments ensure that the financial statements reflect the economic reality of the company's
operations. The trial balance and adjusting entries form the basis for preparing the financial
statements in the next phase of the accounting cycle.