Explain the process involved in accounting smu

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Explain the process involved in accounting smu

The accounting cycle, also commonly referred to as accounting process, is a series of procedures in the collection, processing, and communication of financial information. As defined in earlier lessons, accounting involves recording, classifying, summarizing, and interpreting financial information.


Financial information is presented in reports called financial statements. But before they can be prepared, accountants need to gather information about business transactions, record and collate them to come up with the values to be presented in the reports.

The cycle does not end with the presentation of financial statements.

Explain the process involved in accounting smu

Several steps are needed to be done to prepare the accounting system for the next cycle. Accounting Cycle Steps 1. Identifying and Analyzing Business Transactions The accounting process starts with identifying and analyzing business transactions and events.

Not all transactions and events are entered into the accounting system. Only those that pertain to the business entity are included in the process. For example, a personal loan made by the owner that does not have anything to do with the business entity is not accounted for.

The transactions identified are then analyzed to determine the accounts affected and the amounts to be recorded. The first step includes the preparation of business documents, or source documents. A business document serves as basis for recording a transaction. Recording in the Journals A journal is a book — paper or electronic — in which transactions are recorded.

Business transactions are recorded using the double-entry bookkeeping system. They are recorded in journal entries containing at least two accounts one debited and one credited. To simplify the recording process, special journals are often used for transactions that recur frequently such as sales, purchases, cash receipts, and cash disbursements.

A general journal is used to record those that cannot be entered in the special books.

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Transactions are recorded in chronological order and as they occur. Journals are also known as Books of Original Entry. Posting to the Ledger Also known as Books of Final Entry, the ledger is a collection of accounts that shows the changes made to each account as a result of past transactions, and their current balances.

After the posting all transactions to the ledger, the balances of each account can now be determined. For example, all journal entry debits and credits made to Cash would be transferred into the Cash account in the ledger. We will be able to calculate the increases and decreases in cash; thus, the ending balance of Cash can be determined.Jun 16,  · Q3 Explain the various phases involved in System Development Life Cycle (SDLC).[5*2] [10] Answer: SDLC Phases.

Feasibility; The feasibility study is used to determine if the project should get the go ahead. If the project is to proceed, the feasibility study SPRING Get solved assignments at . 2 Explain the steps involved in planning process. Discuss any 5 importance of Organizing.

MBO or management by objectives is defined as a comprehensive managerial system that integrates many key managerial activities in a systematic process and that is consciously directed toward the effective and efficient achievement of organizational and individual objectives.

Accounting Basics: The Accounting Process All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them.
Contact Form Process of Controlling Controlling as a management function involves following steps: Establishment of standards- Standards are the plans or the targets which have to be achieved in the course of business function.

Much of this work is done through automated accounting systems, but whether by hand or a computer, the process is basically the same. A process audit checks the adequacy and effectiveness of the process controls established by procedures, work instructions, flowcharts, training and process specifications.

1 A process audit is an evaluation of the sequential steps and interactions of a process within a system. As previously stated, the accounting cycle is a series of activities that compiles an organization’s transactions at the end of a reporting period in order to prepare important financial statements.

The Closing Process in the Accounting Cycle | Bizfluent