Accounting Cycle

-sequential process involved in processing accounting information.

1. Identifying Transactions
2. Journalizing
3. Posting (to the Ledger)
4. Adjusting entries
5. Preparation of Trial Balance
6. Preparation of Worksheet
7. Preparation of Financial Statements
8. Closing Entries
9. Post-Closing Trial Balance
10. Reversing Entries

ACCOUNTING
-is the art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions, and events which are in part
-an information and measurement system that identifies, records, and communicates relevant,
reliable, and comparable information about an organization’s business activities.

TRANSACTIONS
-are exchanges of goods or services for money
-for every transaction there is “value received=value given up or parted with”

TYPES OF TRANSACTION EFFECTS OF TRANSACTION

1. SOURCE OF ASSETS= Increase in Assets= Increase or Liability or Equity
2. USE OF ASSETS=Decrease in Liability or Equity=Decrease in Assets
3. EXCHANGE OF ASSETS=Increase in Assets=Decrease in other Assets
4. EXCHANGE OF CLAIMS=Decrease in Equity, Decrease in Liability=Increase in
Liability, Increase in Equity