Accounting Cycle Paper

Accounting Cycle Paper

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ACC/421

July 7, 2014

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Accounting Cycle Paper

Every operating company possesses an accounting cycle whether it is simple or complex. The size of the company and its success will aid in determining the method of recording financial transactions and creating financial statements. Completing the steps of the accounting cycle correctly, will provide the company with a clear view of where it stands financially.

Companies and the Accounting Cycle

The type of industry or company does not decide which steps of the accounting cycle they must complete to create useful financial statements. Overlooking any of the steps will result in inaccurate information regarding the amount owed to creditors, funds owed to the company, costs of labor, total of assets, etc. Smaller companies or those just starting may choose to use accounting programs such as QuickBooks because of its simplicity of use. However, larger companies that have various types of financial transactions require more complex program such as Viewpoint to complete the accounting cycle. One such company is Rock Industries.

Daily Accounting Cycle Procedures

Rock Industries is a mining company with several locations within the northern California area. It mines raw material from the ground then processes it to create products such as sand, gravel, asphalt, and concrete mix. Mining the material requires the use of expensive, heavy mobile equipment and stationary plants. Both means to produce the material require constant maintenance, which requires purchasing items to do so. Purchasing items on account creates a debt the company owes to an outside entity. The accounts payable department is responsible for such occurrences. The company sometimes purchases items with cash, which directly affects the cash account and the cash management department. The payroll department records labor and equipment hours by entering field employee timecards.

Each plant...