If a reversing flag was not set, an entry must be reversed manually, using a new journal entry. The steps required for individual transactions in the accounting process are:. Identify the transaction. First, determine what kind of transaction it may be. Examples are buying goods from suppliers , selling products to customers , paying employees , and recording the receipt of cash from customers.
Prepare document. There is frequently a business document to be prepared or recognized to initiate the transaction, such as an invoice to a customer or an invoice from a supplier. Identify accounts. Every business transaction is recorded in an account in the accounting database, such as a revenue , expense , asset , liability , or stockholders' equity account. Identify which accounts are to be used to record the transaction.
Record the transaction. Enter the transaction in the accounting system. This is done either with a journal entry or an on-line standard transaction form such as is used to record cash receipts against open accounts receivable. In the latter case, the transaction forms record information in a predetermined set of accounts which can be overridden. These four steps are the part of the accounting process used to record individual business transactions in the accounting records. The remaining steps in the accounting process are used to aggregate all of the information created in the preceding steps, and present it in the format of financial statements.
Businesses prepare a trial balance regularly, usually at the end of the reporting period to ensure that the entries in the books of accounts are mathematically correct. It is also important to note that even when the trial balance is considered balanced, it does not mean there are no accounting errors. For example, the accountant may have failed to record an account or classified a transaction incorrectly.
These are accounting errors that would not show up in the trial balance. To prepare a trial balance, you will need the closing balances of the general ledger accounts. The trial balance is prepared after posting all financial transactions to the journals and summarizing them on the ledger statements. The trial balance is made to ensure that the debits equal the credits in the chart of accounts.
The debit side and credit side of ledger accounts are added up. The total of the debit side is placed in the debit column and the total of the credit side in the credit column of the trial balance. The total of the debit column and credit column should be the same. Some of the biggest differences that occur on financial statements prepared under US GAAP versus IFRS relate primarily to measurement or timing issues: in other words, how a transaction is valued and when it is recorded.
The column worksheet is an all-in-one spreadsheet showing the transition of account information from the trial balance through the financial statements. Accountants use the column worksheet to help calculate end-of-period adjustments. Using a column worksheet is an optional step companies may use in their accounting process.
There are five sets of columns, each set having a column for debit and credit, for a total of 10 columns. The five column sets are the trial balance, adjustments, adjusted trial balance, income statement, and the balance sheet. After a company posts its day-to-day journal entries, it can begin transferring that information to the trial balance columns of the column worksheet. The trial balance information for Printing Plus is shown previously.
Once the trial balance information is on the worksheet, the next step is to fill in the adjusting information from the posted adjusted journal entries. The next step is to record information in the adjusted trial balance columns. To get the numbers in these columns, you take the number in the trial balance column and add or subtract any number found in the adjustment column.
Remember that adding debits and credits is like adding positive and negative numbers. You will do the same process for all accounts. Once all accounts have balances in the adjusted trial balance columns, add the debits and credits to make sure they are equal. If you check the adjusted trial balance for Printing Plus, you will see the same equal balance is present.
Next you will take all of the figures in the adjusted trial balance columns and carry them over to either the income statement columns or the balance sheet columns. Take a couple of minutes and fill in the income statement and balance sheet columns.
Total them when you are done. Do not panic when they do not balance. They will not balance at this time. Looking at the income statement columns, we see that all revenue and expense accounts are listed in either the debit or credit column. This is a reminder that the income statement itself does not organize information into debits and credits, but we do use this presentation on a column worksheet.
You will notice that when debit and credit income statement columns are totaled, the balances are not the same. Why do they not balance? If the debit and credit columns equal each other, it means the expenses equal the revenues. This would happen if a company broke even, meaning the company did not make or lose any money. If there is a difference between the two numbers, that difference is the amount of net income, or net loss, the company has earned.
The credit side represents revenues. This means revenues exceed expenses, thus giving the company a net income. If the debit column were larger, this would mean the expenses were larger than revenues, leading to a net loss.
You want to calculate the net income and enter it onto the worksheet. Gift cards are a great way for a company to presell its products and to create cash flow.
This is a real problem, and an internal control to reduce this type of fraud is to use a double verification system for the transfer of money from a bank account to reloadable gift card account.
The individual uses the same password for the reloadable gift card as his or her email account, and the fraudster will see emails about the gift card. The fraudster contacts the retailor posing as the individual, and the retailor creates an in-store gift card redemption code, and the fraudster or his or her accomplice will go to the store posing as the individual and buy physical gift cards with the redemption code.
Does the fraudster use the fraudulently acquired gift cards? No, there is an entire market for selling gift cards on Craigslist , just go look and see how easy it is to buy discounted gift cards on Craigslist. Also, there are companies such as cardcash. The fraudster just sells the gift cards, and the retailer has no idea it is redeeming fraudulently acquired gift cards.
The first four steps in the accounting cycle are 1 identify and analyze transactions, 2 record transactions to a journal, 3 post journal information to a ledger, and 4 prepare an unadjusted trial balance. We begin by introducing the steps and their related documentation.
These first four steps set the foundation for the recording process. Step 1. Identifying and analyzing transactions is the first step in the process. This takes information from original sources or activities and translates that information into usable financial data.
An original source is a traceable record of information that contributes to the creation of a business transaction. For example, a sales invoice is considered an original source. Activities would include paying an employee, selling products, providing a service, collecting cash, borrowing money, and issuing stock to company owners.
Once the original source has been identified, the company will analyze the information to see how it influences financial records. This sales receipt contains information such as how much the customer owes, payment terms, and dates.
This sales receipt is an original source containing financial information that creates a business transaction for the company. Step 2. The second step in the process is recording transactions to a journal.
0コメント