ACCOUNTING BASICS:

Financial Accounting
ACCOUNTING
Financial Accounting
Managerial Accounting
Tax
Audit
Bookkeeping
Etc.
 What is Financial Accounting?

• The process of identifying, recording, summarising and analysing an entity’s financial

transactions and reporting them in the financial statements.

• Financial accounting is concerned specifically with the generation of these reports,

that they are based on accurate information and follow “Generally Accepted
Accounting Principles” (otherwise known as GAAP).
FINACIAL ACCOUNTING CYCLE
STEP 1: IDENTIFY TRANSACTIONS

STEP 2: PREPARE JOURNAL ENTRIES

STEP 3: POST TO GENERAL LEDGER

STEP 4: UNADJUSTED TRIAL BALANCE

STEP 5: POST ADJUSTING ENTRIES

STEP 6: ADJUSTED TRIAL BALANCE

STEP 7: CREATE FINANCIAL STATEMENTS

STEP 8: POST CLOSING ENTRIES

STEP 1: Identify Transactions

To identify a transaction means to determine if a transaction actually

exists and whether or not it is relevant to the business. After a transaction
has been identified, it is then analyzed. The analysis is basically deciding
which accounts of the business will be affected and how they will be
affected.
STEP 2: Prepare Journal Entries

What is Journal Entry?

A journal entry is used to record a business transaction in the accounting records

of a business

First read and understand the transaction clearly. Find out which account is to be
debited and credited, and after this you can enter journal entry.

After entering the journal entry, write down the summary description (narration) for
both debit and credit transactions.
STEP 3:Post To General Ledger

The general ledger tracks five prominent accounting items: assets,

liabilities, owner's capital, revenues, and expenses. Transactions that first
appear in the journals are subsequently posted in general ledger
accounts.
STEP 4:Unadjusted Trial Balance

An unadjusted trial balance is a listing of all the accounts found in a

general ledger. It is prepared at the end of the period (e.g. month, quarter,
year) before any adjusting entries are made.
STEP 5:Post Adjusting Entries

Posting adjusting entries is the same process as posting general journal

entries.

The additional adjustments may add accounts to the end of the period or
may change account balances from the earlier journal entry step in the
accounting cycle.
STEP 6:Adjusted Trial Balance

An adjusted trial balance is a listing of all company accounts that will

appear on the financial statements after year-end adjusting journal entries
have been made.
STEP 7:Create Financial Statements

They are:

(1) balance sheets;

(2) income statements;

(3) cash flow statements; and

(4) statements of shareholders' equity.

STEP 8:Post Closing Entries

A post-closing trial balance is a listing of all balance sheet accounts

containing non-zero balances at the end of a reporting period.

Also, it is used to verify that the total of all debit balances equals the total
of all credit balances, which should net to zero.
CORE PRINCIPLE

A company's total assets are equal to its liabilities plus its shareholders' equity.
 IFRS PFRS GAAP
INTERNATIONAL FINANCIAL PHILIPPINE FINANCIAL REPORTING GENERALLY ACCEPTED
REPORTING STANDAR STANDARDS ACCOUNTING PRINCIPLES

The purpose of these standards is to ensure consistency in

recording, recognizing and measuring financial transactions,
which, if followed properly, will ensure stability and transparency
throughout the financial reporting process of the company.
Thank you for
listening!