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1February 5, 2016

Name: Aashir Khan

Erindale Secondary School

Global Studies Department
Several important principles were presented as part of your introductory accounting class, BAF 3MO. A firm
understanding of the basic accounting fundamentals will assist you in understanding and analyzing future
transactions. Try to complete this form as best you can by recalling information from the introductory class
and current class discussion.
Step of Cycle
1. Transactions Occurs

2. Analyze and Apply the

DR/CR Theory
3. Journalize

Occurs very often in business where there is an exchange of benefit between parties
involved in the transaction ie. A customer enters a store and buys goods; the
customer will receive the goods for either cash or some future payment.
Several rules apply such as: DR must always equal CR, at least 2 accounts must be
affected with each transaction (A good strategy is to always ask yourself two
questions: What accounts are affected? How are these accounts affected?
A process of recording transactions in chronological order (by order of occurrence)
in the first book of account called the journal. There must always be a date, debit
entries are listed first at the left margin, credit entries are indented, debits must
always equal credits, there must be a line of explanation and transactions are
separated by blank lines.

4. Post to Ledger

A process of transferring information from the first book of account to the second
book, the ledger. A ledger is simply any group of accounts and is a stylized
accounting form that includes space for dates, cross referencing, DR and/or CR
entries and final balances.

5. Trial Balance

An equality check to ensure the books are balanced whereby all of the debits in the
ledger are added and compared to a total of all credits in the ledger. A variety of
errors may cause the totals to be different. Careful application of accounting
processes will ensure accuracy.

6. Worksheet

An organizational tool which assists in the preparation of the financial statements. A

key element of this process would be the preparation of adjustments which are
completed towards the end of the accounting cycle to allow for a fairer
representation of the financial statements.

7. Prepare the Financial


Most important step of the accounting cycle whereby revenues are matched against
expenses for the given time period to display profit or loss on Income Statement and
financial position is shown on the Balance Sheet. These documents are essential in
making future business decisions.

8. Closing Process

A process of journalizing and posting whereby all temporary accounts are closed
or reset to zero in anticipation of accumulating information for the next fiscal period.
The capital account must be updated each fiscal period to ensure the Balance Sheet
does in fact balance.