Class 1 Accounting Cycle - The Accounting Cycle The...

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The Accounting Cycle
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The Accounting Cycle Recording Phase Business documents analyzed Transactions recorded using journal entries Transactions posted to appropriate ledger accounts Reporting Phase Preliminary trial balance prepared Adjusting entries recorded Financial statements prepared Nominal accounts closed Post-closing trial balance prepared 2
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Beginning Trial Balance The Accounting Cycle 3 Balance Sheet Record Transactions Preliminary Trial Balance Adjusting Entries Adjusted Trial Balance Closing Entries Post-Closing Trial Balance Income Statement Business Documents Recording Phase Reporting Phase
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Recording Phase: Types of Accounts General Ledger/Control Accounts Accounts appearing on the financial statements, (and certain contra and adjunct accounts). Summarizes information from subsidiary ledger accounts, if subsidiary ledger used. Example: Accounts Receivable. Subsidiary Ledger Accounts Contain detail for amounts in the general ledger accounts. Example: individual customer accounts. 4
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Recording Phase: Types of Accounts Permanent or Real Accounts (Balance Sheet) Asset accounts Liability accounts Shareholders’ equity accounts Balances carried over to following accounting period .
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