The Accounting Cycle

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The accounting cycle

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• Washington, DC Accounting

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The Accounting cycle of a business

• Lets take a look at the entire accounting cycle
  of a business.
• Business transactions are recorded in a Journal
  during the month.
• At the end of the month Adjusting Entries are
  prepared, and placed in the Journal.

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The Accounting cycle of a business

• A final set of Closing Entries are then placed
  in the Journal, and the Financial Statements
  are prepared.
• The process begins again for the next accounting
  period.

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The accounting cycle of a business
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Basic Accounting terminology

• Journal
• The book of original entry. All transaction are
  recorded here first.
• Adjusting Entries
• These are entries to assign revenue and expenses
  in the period incurred. These additional
  month-end entries match expired costs and
  unrecorded revenues to the period

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Basic Accounting terminology

• Closing Entries
• Entries made to zero balance all temporary
  accounts at the end of the accounting period.
• Income Statement
• The profit or loss of the business based on
  earnings less expense. This statement reflects a
  period of time (usually one month)

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Basic Accounting terminology

• Balance Sheet
• A snapshot of the business assets,
  liabilities and owners equity (also known as
  net worth). Assets are property. Liabilities
  are what is owed. Owners equity is the
  difference between the assets and liabilities.
• Transactions
• Business papers and source documents.

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