The accounting cycle is the process through which a corporation records, summarizes, and reports its financial

transactions. It includes the full financial accounting process, from first transaction recording through financial
statement production. The following steps are frequently included in the accounting cycle:

1. Identification and transaction analysis: This stage entails identifying and analyzing the business transactions
that happened within a certain accounting period. Sales, purchases, costs, and other financial operations are
examples of transactions.

2. Journalizing: After identifying the transactions, they are entered in the general journal. The general journal is
a chronological record of all transactions, including the date, description, and monetary amounts.
3. Posting: The information recorded in the general journal is transferred to the general ledger at this stage.
Individual accounts for assets, liabilities, equity, revenue, and costs are kept in the general ledger. Posting is the
process of changing account balances based on journal entries.
4. Trial balance: A trial balance is created after publishing. The trial balance shows all of the general ledger
accounts and their balances. Its goal is to guarantee that the debits and credits are equal and that the accounts
are balanced.

5. Adjusting entries are created at the conclusion of each accounting period to reflect any necessary
modifications. These entries often pertain to accumulated costs, prepaid expenses, unearned income,
depreciation, and other things that must be recognized in the applicable accounting period.

6. Adjusted trial balance: After the adjusting entries have been entered, the adjusted trial balance is created. It
displays the updated account balances following the modifications.
7. Financial statements: The corporation creates financial statements, such as the income statement, balance
sheet, and statement of cash flows, using the adjusted trial balance. These statements summarize the
company's financial performance and condition.

8. Closing entries are done at the conclusion of the accounting period to move temporary accounts (revenue,
cost, and dividend accounts) to the retained profits account. In preparation for the following accounting
period, this method resets the temporary accounts to zero.

9. Post-closing trial balance: A post-closing trial balance is created after the closing entries have been recorded.
It checks the balance of the accounts and acts as the starting point for the following accounting period.

The accounting cycle is a systematic process that ensures accurate and reliable financial information is
recorded, summarized, and reported in a consistent manner. It helps businesses maintain their financial
records, comply with accounting standards, and make informed decisions based on the financial statements.
The general journal, often known as the book of original entries, is a chronological record of all a business's financial
activities. It is an essential part of the double-entry accounting system. Each transaction is documented in the general
journal with a journal entry that includes the date, accounts involved, a brief explanation, and the amounts debited and
credited.

Here's an example of a general journal entry:

Date: June 1, 2023

Account Title Debit Credit

--------------------------------------------

Cash 500,000

Sales Revenue 500,000

Sold merchandise for cash

In this example, the entry indicates that on June 1, 2023, the company received ₱500,000 in cash from the sale of
merchandise. The account "Cash" is debited (increased) by ₱500,000, while the account "Sales Revenue" is credited
(increased) by the same amount.

The general journal has numerous functions:

1. Record-keeping: It keeps a thorough and orderly record of all financial transactions for simple reference and retrieval.

2. The general journal aids in the creation of a clear and verifiable trail of transactions, which aids in internal and external
audits.

3. Analysis and decision-making: The general journal help firms assess their financial activities and make educated decisions
based on correct data by recording transactions in detail.

4. Posting source: The general journal is used to publish entries to the general ledger, which is a collection of individual
accounts.

It's worth mentioning that when a company expands, the number of transactions might become so large that recording
every transaction in the general journal becomes impossible. Specialized journals, such as sales journals, purchase journals,
and cash receipt journals, are frequently utilized in such circumstances to record certain sorts of transactions. After that, the
general journal is used to record non-routine or adjusting entries that do not fit into the specialized journals.
A trial balance is a list of all the general ledger accounts and their current balances. It is used to ensure the accuracy of
financial transaction recording and summarization. The trial balance is often prepared at the end of an accounting period,
such as a month, quarter, or year.

In an accounting system, a trial balance is used to determine the equality of debits and credits. It confirms that the double-
entry accounting rules were correctly followed, with equal debits and credits recorded for each transaction.

Here's an example of trial-balancing simplified:

Account Title Debit Balance Credit Balance

---------------------------------------------------------
Cash ₱5,000
Accounts Receivable 3,000
Inventory 7,500
Accounts Payable ₱2,500
Owner's Equity 10,000
Sales Revenue 20,000
Expenses 8,000
---------------------------------------------------------
Total ₱15,500 ₱30,000

In the example above, the left column represents accounts with debit balances, while the right column represents
accounts with credit balances. The total debits (₱15,500) and the total credits (₱30,000) should be equal if the
accounts have been accurately balanced.

A trial balance assists in detecting accounting issues such as:

1. Mathematical errors: If a transaction is submitted with incorrect amounts or computations are conducted incorrectly, a
trial balance will show an imbalance between debits and credits.

2. Posting errors: If a transaction is not precisely recorded in the general ledger or is submitted to the wrong account, a trial
balance will show an imbalance.

3. When a transaction is completely erased from the accounting records, it causes an imbalance in the trial balance.

If the trial balance displays an equal balance of debits and credits, the books are in balance. It does not, however, guarantee
that the accounting records are error-free. Errors might still offset each other, resulting in an equal trial balance. As a result,
the trial balance is only one stage in the total process of ensuring the correctness of financial data.

If an imbalance is discovered in the trial balance, accountants must examine and repair the inaccuracies before proceeding
with the financial statement production.
A chart of accounts is an ordered list of all the many accounts that a company employs to record its financial
transactions. It serves as a structure for organizing and categorizing the company's various financial activities. The
chart of accounts is a way of organizing and monitoring financial data that is uniform and methodical.

Each account in the chart of accounts is issued a unique account number or code and is classified according to its
kind. The structure and organization of the chart of accounts may vary per firm, but it often includes the following
key categories:

1. Assets: This category covers all of the company's resources, such as cash, accounts receivable, inventory,
equipment, and property.

2. Accounts payable, loans payable, accumulated costs, and other liabilities are examples of liabilities.

3. Equity accounts contain common shares, retained profits, and dividends and indicate the company's ownership
stake.

4. Revenue accounts represent the company's income from its major business operations, such as sales revenue,
service revenue, or interest income.

5. Expenses: Expenses are the expenditures incurred by the firm in producing revenue and conducting its
operations. Salary and pay are examples, as are rent, utilities, advertising expenditures, and supplies.

6. Gains and Losses: These accounts are used to record any non-operating gains or losses, such as gains or losses from
the sale of assets or foreign exchange transactions.

The chart of accounts is meant to provide a rational and consistent structure for recording and reporting financial
data. It enables firms to track and analyze transactions, generate financial statements, and offer appropriate data to
management, stakeholders, and regulators.

The particular accounts and amount of information in the chart of accounts may differ based on the size and
complexity of the company. Larger organizations may have a more sophisticated chart of accounts, with several
accounts and sub-accounts to monitor certain financial operations, divisions, or locations. Smaller businesses may
have a more simple chart of accounts with fewer accounts, but they must still cover the core financial components
of their operations.

Maintaining an organized and up-to-date chart of accounts is crucial for accurate financial reporting, efficient
accounting, and effective management.

Maintaining a well-organized and up-to-date chart of accounts is critical for accurate financial reporting, efficient
accounting, and effective monitoring of a company's financial performance.