Chapter 3 notes - Accounting Cycle The sequence of...

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Accounting CycleCycle The sequence of accounting procedures used to record, classify, and summarize accounting information. The cycle begins with the initial recording of business transactions and concludes with the preparation of formal financial statements.(1) journalize (record) transactions, (2) post each journal entry to the appropriate ledger accounts, and (3) prepare a trial balance. Theremaining steps of the cycle will be addressed in Chapters 4 and 5. They include (4) making end-of-period adjustments, (5) preparing an adjusted trial balance, (6) preparing financial statements, (7) journalizing and posting closing entries, and (8) preparing an after-closing trial balance.AccountabilityThe condition of being held responsible for one's actions by the existence of an independent record of those actions. Establishing accountability is a major goal of accounting records and of internalcontrol procedures.AccountA record used to summarize all increases and decreases in a particular asset, such as cash, or any other type of asset, liability, owners' equity, revenue, or expense.LedgerAn accounting system includes a separate record for each item that appears in the financial statements. Collectively, these records are referred to as a company's ledger. Individually, these records are often referred to as ledger accounts.

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