Acc 421 Week 1 Individual Assignment - Accounting Cycle

Accounting Cycle

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ACC 421

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Instructor

Accounting Cycle

The accounting cycle is a systematic process used to help perform the basic function of accounting, which is to identify, record, and communicate information. A business or organization may have its own unique way of performing its accounting cycle, but each must perform the task in one way or another. Alvarez Bookkeeping Services, a small family operated business, has a very simplified version of the accounting cycle. The company was established in 1971 and is located in Flushing, NY. The company is consists of four employees this includes the owner. One person, the owner, performs the entire accounting cycle for the Alvarez Bookkeeping Services. Gradually, the accounting cycle has evolved much like business have evolved; the multiple steps have been reduced as technology has simplified the process, “today, most companies use accounting software that processes many of these steps simultaneously” (Averkamp, n.d., para. 3).

The accounting cycle consists of: identifying, journalizing, posting, trail balance, adjusted entries, adjusted trial balance, preparing financial statements, closing, post-closing trial balance, reversing entries, and financial statements (Kieso, Weygandt, & Warfield, 2007). Identifying a transaction or event is the first step in the cycle; businesses engage in various activities on a daily, as a result, determining when to record and activity is crucial. Once the activity is identified a transaction must be recorded, the next step is to journalize the transaction. The journalizing process can be completed in a variety of ways; the most common method is the general journal, although some companies keep other special journals. The next step in the accounting cycle is posting, which is the procedure of transferring journal entries to the ledger accounts (Kieso et al., 2007), so that the transactions reflect in the appropriate ledger accounts balances. After the...