Фінансова енциклопедія


1 A B C D E F G H I J L M N O P Q R S T U V W X Y Z А Б В Г Д Е Ж З И І К Н О П Р С Т У Ф Ц Ч Э



ACCOUNTING CYCLE (eng)



The primary objectives of the accounting function in an organization are to process financial information and to prepare financial statements at the end of the accounting period. Companies must systematically process financial information and must have staff who prepare financial statements on a monthly, quarterly, and/or annual basis. To meet these primary objectives, a series of steps is required. Collectively these steps are known as the accounting cycle. The steps, applicable to a manual accounting system, are described below. Later, there will be a brief discussion of a computerized processing system.

THE STEPS OF THE CYCLE
1. Collect and analyze data from transactions and events: As transactions and events related to financial resources occur, they are analyzed with respect to their effect on the financial position of the company. As an example, consider the sales for a day in a retail establishment that are collected on a cash register tape. These sales become inputs into the accounting system. Every organization establishes a chart of accounts that identifies the categories for recording transactions and events. The chart of accounts for the retail establishment mentioned earlier in this paragraph will include Cash and Sales.
2. Journalize transactions: After collecting and analyzing the information obtained in the first step, the information is entered in the general journal, which is called the book of original entry. Journalizing transactions may be done continually, but this step can de done in a batch at the end of the day if data from similar transactions are being sorted and collected, on a cash register tape, for example. At the end of the day, the sales of $4,000 for cash would be recorded in the general journal in this form:
Cash 4000
Sales 4000

3. Post to general ledger: The general journal entries are posted to the general ledger, which is organized by account. All transactions for the same account are collected and summarized; for example, the account entitled ‘‘Sales’’ will accumulate the total value of the sales for the period. If posting were done daily, the ‘‘Sales’’ account in the ledger would show the total sales for each day as well as the cumulative sales for the period to date. Posting to ledger accounts may be less frequent, perhaps at the end of each day, at the end of the week, or possibly even at the end of the month.
4. Prepare an unadjusted trial balance: At the end of the period, double-entry accounting requires that debits and credits recorded in the general ledger be equal. Debit and credit merely signify position— left and right, respectively. Some accounts normally have debit balances (e.g., assets and expenses) and other accounts have credit balances (e.g., liabilities, owners’ equity and revenues). As transactions are recorded in the general journal and subsequently posted to the ledger, all amounts recorded on the debit side of accounts (i.e., recorded on the left side) must equal all amounts recorded on the credit side of accounts (i.e., recorded on the right side). Preparing an unadjusted trial balance tests the equality of debits and credits as recorded in the general ledger. If unequal amounts of debits and credits are found in this step, the reason for the inequality is investigated and corrected before proceeding to the next step. Additionally, this unadjusted trial balance provides the balances of all the accounts that may require adjustment in the next step.
5. Prepare adjustments: Period-end adjustments are required to bring accounts to their proper balances after considering transactions and/or events not yet recorded. Under accrual accounting, revenue is recorded when earned and expenses when incurred. Thus, an entry may be required at the end of the period to record revenue that has been earned but not yet recorded on the books. Similarly, an adjustment may be required to record an expense that may have been incurred but not yet recorded.
6. Prepare an adjusted trial balance: As with an unadjusted trial balance, this step tests the equality of debits and credits. However, assets, liabilities, owners’ equity, revenues, and expenses will now reflect the adjustments that have been made in the previous step. If there should be unequal amounts of debits and credits or if an account appears to be incorrect, the discrepancy or error is investigated and corrected.
7. Prepare financial statements: Financial statements are prepared using the corrected balances from the adjusted trial balance. These are one of the primary outputs of the financial accounting system.
8. Close the accounts: Revenues and expenses are accumulated and reported by period, either a monthly, quarterly, or yearly. To prevent their not being added to or comingled with revenues and expenses of another period, they need to be closed out—that is, given zero balances—at the end of each period. Their net balances, which represent the income or loss for the period, are transferred into owners’ equity. Once revenue and expense accounts are closed, the only accounts that have balances are the asset, liability, and owners’ equity accounts. Their balances are carried forward to the next period.
9. Prepare a post-closing trial balance: The purpose of this final step is two-fold: to determine that all revenue and expense accounts have been closed properly and to test the equality of debit and credit balances of all the balance sheet accounts, that is, assets, liabilities and owners’ equity.

COMPUTERIZED ACCOUNTING SYSTEM
A computerized accounting system saves a great deal of time and effort, considerably reduces (if not eliminates) mathematical errors, and allows for much more timely information than does a manual system. In a real-time environment, accounts are accessed and updated immediately to reflect activity, thus combining steps 2 and 3 as discussed in the preceding section. The need to test for equality of debits and credits through trial balances is usually not required in a computerized system accounting since most systems test for equality of debit and credit amounts as they are entered. If someone were to attempt to input data containing an inequality, the system would not accept the input. Since the computer is programmed to post amounts to the various accounts and calculate the new balances as new entries are made, the possibility of mathematical error is markedly reduced.
Computers may also be programmed to record some adjustments automatically at the end of the period. Most software programs are also able to prepare the financial statement once it has been determined the account balances are correct. The closing process at the end of the period can also be done automatically by the computer. Human judgment is still required to analyze the data for entry into the computer system correctly. Additionally, the accountant’s knowledge and judgment are frequently required to determine the adjustments that are needed at the end of the reporting period. The mechanics of the system, however, can easily be handled by the computer.

(SEE ALSO: Accounting; Accounting information systems) BIBLIOGRAPHY Dansby, Robert, Kaliski, Burton, and Lawrence, Michael (1999). College Accounting. St. Paul, MN: EMC Paradigm. Ingram, Robert W., and Baldwin, Bruce A. (1998). Financial Accounting: A Bridge to Decision Making. Cincinnati, OH: South-Western College Publishing.
Larson, Kermit D. (1997). Essentials of Financial Accounting. Boston: Irwin/McGraw-Hill.
Meigs, Robert F., Meigs, Mary A., Bettner, Mark, and Whittington, Ray. (1998). Financial Accounting. Boston: Irwin/McGraw Hill.
Needles, Belverd E., and Powers, Marian (1998). Financial Accounting. Boston: Houghton Mifflin.
Porter, Gary A., and Norton, Curtis L. (1998). Financial Accounting. Fort Worth, TX: Dryden Press.
ALLIE F. MILLER



Fin.org.ua

Інші статті енциклопедії




Пошук в Фінансовій енциклопедії


Futures and options,
Derivatives and hedging,
Risk and reward tradeoffs.

- Fin.Org.UA

Новини

23:49 - Інфляційний звіт, квітень 2025 року
23:49 - Інфляція за підсумками 2025 року знизиться до однознакового рівня, а зростання економіки триватиме – Інфляційний звіт
22:51 - У Monobank зміниться структура власності: кому він належатиме?
21:00 - Новини 24 квітня: Китай поставив США жорстку митну умову, Тігіпко купив "Ідея Банк"
20:45 - У московія вважають, що зможуть використати торгову війну Трампа на свою користь
20:22 - Продажі Tesla у Європі впали майже на третину
20:17 - Україна і Швеція поглиблюють співпрацю для відновлення та «зеленої» трансформації енергосектору
20:05 - Доллар: вблизи отскока
19:53 - Колишній партнер Apple і Tesla з Білорусі постачав військове обладнання армії московія – ЗМІ
19:24 - Нацбанк показав курс долара та євро на п'ятницю 25 квітня
18:55 - З Києва до Ужгорода курсуватиме додатковий потяг: в який період
18:31 - Економіка Німеччини вирішила відпочити: прогноз зростання на 2025 рік – нульовий
18:10 - В Україні впали ціни на тепличні огірки: скільки коштують
17:58 - Марченко розповів, чи достатньо Україні зовнішнього фінансування на 2025 рік
17:53 - Герман Галущенко в Лондоні виступив на саміті МЕА, присвяченому енергетичній безпеці
17:50 - московіяни атакували залізничний вокзал Краматорська: наслідки
17:25 - Золото: волатильность на вершине
17:25 - У Львові може зрости вартість проїзду в громадському транспорті
17:20 - Китай поставив США жорстку умову: "Хочете говорити - скасуйте мита"
17:02 - Міністри енергетики України і Франції обговорили співпрацю для відновлення енергосектору і поглиблення співробітництва в атомній галузі
16:50 - СЕО "Смарт Холдингу": Якщо є питання до Новинського – наздоганяйте його
16:40 - Внаслідок ворожої атаки не працювала частина техсистем "Укргазбанку"
16:21 - Комітет Ради підтримав законопроєкт про легалізацію криптовалют: що він передбачає
16:00 - Що стримує розвиток розподіленої генерації
16:00 - Ваші вантажі у безпеці: відтепер Colonnade страхує воєнні ризики для наземних перевезень
15:56 - Один із найбільших сировинних трейдерів світу розпродав нафтові активи в московія
15:55 - Засідання Комісії
15:40 - Ексзаступника агроміністра підозрюють у розкраданні 27 мільйонів державних коштів
15:30 - Курси валют, встановлені НБУ на 25.04.2025
15:30 - Стало відомо, що Україна запропонувала власникам ВВП-варантів


Більше новин

ВалютаКурс
Алжирський динар0.3152
Австралійський долар26.5851
Така0.34171
Канадський долар30.071
Юань Женьміньбі5.719
Чеська крона1.8981
Данська крона6.3517
Гонконгівський долар5.3732
Форинт0.116437
Індійська рупія0.48893
Рупія0.0024708
Новий ізраїльський шекель11.4273
Єна0.29243
Теньге0.080718
Вона0.029037
Ліванський фунт0.000466
Малайзійський ринггіт9.5348
Мексиканське песо2.1274
Молдовський лей2.414
Новозеландський долар24.9092
Норвезька крона4.0071
Саудівський ріял11.1138
Сінгапурський долар31.7703
Донг0.0016013
Ренд2.2288
Шведська крона4.3437
Швейцарський франк50.4954
Бат1.24668
Дирхам ОАЕ11.3498
Туніський динар13.9526
Єгипетський фунт0.8181
Фунт стерлінгів55.486
Долар США41.689
Сербський динар0.40437
Азербайджанський манат24.5186
Румунський лей9.5278
Турецька ліра1.0881
СПЗ (спеціальні права запозичення)56.5336
Болгарський лев24.2462
Євро47.4171
Ларі15.1679
Злотий11.0928
Золото139141.21
Срібло1393.61
Платина40801.02
Паладій39512.42

Курси валют, встановлені НБУ на 25.04.2025