Critical Evaluation of Accounting Cycle - 3883 Words

INTRODUCTION: An Organization often needs a way to keep score when conducting business operations. Accounting usually fits this need because it allows create to companies financial reports that can be compared with other companies or an industry standard. Business owners and managers also use accounting to review the efficiency of operations. This information may help owners and managers make business decisions and improve the company’s profitability. Accounting is basically defined as the process of identifying, measuring and communicating economic information to help its users make informed judgment and decisions. It also involves recording, classifying, summarizing and interpreting financial transactions and events about economic†¦show more content†¦Financial statements are the most important reports of a business. These statements are prepared from the information in the trial balance. The purpose of these statements is to show the reader the financial position, financial performance and cash flows of a business, as well as other useful information concerning the business. Financial statements are usually prepared once a year. Financial statements consist of (amongst other things) an income statement, statement of changes in the owner’s equity, balance sheet, cash flow statement and (where needed) an auditor’s report. Thus we can say ACCOUNTING CYCLE indicates the technique of preparing financial statement for the consumption of different stockholders within a given guideline. Accounting Cycle is a Technique: The accounting cycle begins when business transactions are entered into the journal. Transactions include all events that impact any of the company s accounts, such as cash on hand, or accounts receivable, or bank loans payable. Journal entries accumulate in chronological order —the order in which they occur. The second step in the accounting cycle is transferring (posting) journal entries into a ledger or ledgers, where they are organized first by account, and then chronologically within accounts. Journal: On 1 September, two customers place product orders, on credit. Customer 1 orders $4,200 in products, Customer 2 orders $5,800 in products. Later the same day, the companyShow MoreRelatedRiordan Manufacturing Essay1601 Words   |  7 PagesHang Zhou, China. Currently, Riordans COO, Hugh McCauley, and the executive team have requested changes to the current information system used to maintain inventory and manufacturing processes. Evaluation of current Sales, Inventory, and Manufacturing processes will be required as well as the evaluation of current hardware and software. The present networking system requires improvements and, thanks to todays technology can easily be upgraded. 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