The Series of business transactions which occur from the beginning of an accounting period to the end of an accounting period is referred any specific period of time for which a summary of business’s transaction is prepared.

Steps in Accounting Cycle:-

1.        Journalizing (Recording)

2.        Posting to Ledger (Classifying)

3.        Final Account (Summarizing)

Now Explain Steps:-

1 Recording:- This is the basic function of accounting. All business transaction, as evidenced by some documents such as Sale bill, Pass book, Salary Slip ect are recorded in the books of account. This is called recording process.

2.       Classifying:- All entries in the Journal or books of Original Entry should be posted to the appropriate ledger accounts to find out at a glance the total effect of all such transactions in a particular account.

3.           Summarizing:- It is concerned with the preparation and presentation of the classified data in a manner useful to the Internal a well as the external users of financial statements. This process leads to the preparation of the following financial statements:-

a)     Trial Balance

b)    Profit & Loss Account

c)     Balance Sheet

d)  Cash flow Statement.

No comments:

Post a Comment