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    4.accounting Cycle (Financial Accounting)

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    Asjad Jamshed
    In practical life there is a fine process of accounting record from a "Transaction to the Balance Sheet" transactions are recorded in various books of accounts, and in the second phase we prepare Income Statement and Balance Sheet at the end of a fiscal period. Ledger is a book which contains the condensed and classified record of all the transactions of a business in shape of accounts.

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    4.accounting Cycle (Financial Accounting)

    Uploaded by

    Asjad Jamshed
    78 views3 pages
    In practical life there is a fine process of accounting record from a "Transaction to the Balance Sheet" transactions are recorded in various books of accounts, and in the second phase we prepare Income Statement and Balance Sheet at the end of a fiscal period. Ledger is a book which contains the condensed and classified record of all the transactions of a business in shape of accounts.

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    4.Accounting Cycle(Financial Accounting)

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    In practical life there is a fine process of accounting record from a "Transaction to the Balance Sheet" transactions are recorded in various books of accounts, and in the second phase we prepare Income Statement and Balance Sheet at the end of a fiscal period. Ledger is a book which contains the condensed and classified record of all the transactions of a business in shape of accounts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    78 views3 pages

    4.accounting Cycle (Financial Accounting)

    Uploaded by

    Asjad Jamshed
    In practical life there is a fine process of accounting record from a "Transaction to the Balance Sheet" transactions are recorded in various books of accounts, and in the second phase we prepare Income Statement and Balance Sheet at the end of a fiscal period. Ledger is a book which contains the condensed and classified record of all the transactions of a business in shape of accounts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
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    Financial accounting notes

    ACCOUNTING CYCLE: -
    In practical life there is a fine process of accounting record from a
    “Transaction to the Balance Sheet”. The process is consisted of two parts, i.e.
    Recording and Summarizing.
    In the first phase the transactions are recorded in various books of accounts, and in
    the second phase we prepare Income Statement and Balance Sheet at the end of a
    fiscal period.
    Different Stages of Accounting:
    TRANSACTIONS
    (Vouchers)

    entered into

    JOURNAL

    Purchases Journal
    Purchases Returns and Allowances JournalSales Journal
    Sales Returns and Allowances JournalCash Journals
    CRJ and CPJJournal for NotesGeneral Journal
    Misc. Journal
    LEDGER

    TRIAL BALANCE

    ADJUSTMENTS

    ADJUSTED TRIAL
    BALANCE

    FINANCIAL STATEMENTS
    INCOME STATEMENT
    AND
    BALANCE SHEET

    CLOSING ENTRIES

    CLOSING TRIAL BALANCE

    REVERSING ENTRIES

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    Financial accounting notes

    JOURNAL:-
    A book in which all the transactions of a business are recorded first is called
    “Journal”. The transactions are recorded chronologically, i-e in order of occurrence.
    It is also known as “Book of Original Record”, a book of “Original Entry” or “Day
    Book”, because the day to day transactions are recorded in it. In very large units a
    number of journals are prepared instead of one, e-g cash journal, sales journal etc.

    LEDGER:-
    When we bring together all the accounts of the same nature on one page, we
    are in fact preparing a “ledger account”. A separate page for each account is
    allocated in ledger, and all the transactions of the same nature are recorded on that
    page in a summarized form. The term ledger is defined as, “A book which contains
    the condensed and classified record of all the transactions of a business in shape
    of accounts”.
    • These are two forms of ledger. I-e, Periodical Balance form and Running
    Balance form.
    • Ledger can be classified as: General Ledger and Subsidiary Ledgers.

    TRIAL BALANCE:-
    Having posted all accounts from journal into ledger, it is better to prove the
    accuracy of the post record before proceeding further. For this purpose, a list of
    accounts is prepared which is called “Trial Balance”.

    INCOME STATEMENT:-
    The statement prepared to know the gross income and the net income at the
    end of a particular period is known as income statement.

    BALANCE SHEET: -
    The Balance Sheet is the list of assets and equities prepared at a specific time.
    It is also known as the statement of financial condition of a firm.

    ADJUSTING ENTRIES:-
    The entries which bring the balance of an account up to date to find out the
    correct balance and correct information at the end of a fiscal period are called
    “Adjusting Entries”. The following adjustments are necessary to be made at the end
    of a financial year:
    =>Accured Expenses / Unrecorded Expenses
    =>Prepaid Expenses / Expenses paid in advance
    =>Accured Revenue / Unrecorded revenue
    =>Unearned Revenue =>Depreciation =>Interest on capital or drawings
    =>Adjustments of A / R =>Unused Supplies =>Merchandise Inventories.

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    Financial accounting notes

    ADJUSTED TRIAL BALANCE:-


    A trial balance drafted after carrying out necessary adjustments in accounts
    at the close of a given period to revise the figures appearing in the trial balance (pre-
    adjusted) is known as “adjusted trial balance”.

    REVERSING ENTRIES:-
    Some sorts of entries are passed on the beginning of an accounting period to
    reverse the effect of adjustments from the books of accounts. These are called
    “reversing” or “readjusting entries”. These entries are passed on the first day of
    the subsequent period.

    CLOSING ENTRIES”-
    On the preparation of income statement and balance sheet, it is necessary to
    close all the temporary (nominal accounts. The journal entries passed to achieve this
    purpose are called “closing entries”.

    CLOSING TRIAL BALANCE:-


    The main purpose of the preparation of such trial balance is to satisfy that
    the ledger accounts are in balance for the beginning of the new accounting year.

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