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The Accounting Cycle


The Accounting Cycle

The following steps summarize the general accounting cycle:

  1. Transactions are first recorded in journals. The process of recording transactions into journals is called journalizing. Each transaction is recorded as a journal entry.

  2. Journal entries are posted to the general ledger. This process is called posting .

  3. Adjusting entries are made (journalized) and posted to the general ledger.

  4. A trial balance can now be created, which shows all accounts and their up-to-date balances . A balance is the monetary amount of the transaction, along with the information of whether this transaction is a debit or credit.

    A trial balance is not the same as a balance sheet , which is a formalized financial statement.

  5. Formalized financial statements are written.

  6. Closing journal entries are made (journalized) and posted to the ledger. Often, another trial balance, called the "after-closing" or "post-closing" trial balance, is prepared with closing journal entries.



The Formalized Reports of the Accounting Cycle

The goal of the accounting cycle is to reflect the true financial condition and transactions of a company. These goals are met through the creation of the following formalized reports:

  • Balance Sheet: Displays the assets of a company, balanced with the sum of liabilities and owners ' equity. The Balance Sheet displays information as of a specific date.

    This report is sometimes known as a Statement of Financial Position.

  • Income Statement: Displays a summary of revenue and expenses of a company for a defined period of time. This statement does not report net income or net loss for the defined period.

    This report is sometimes known as a Statement of Earnings or Statement of Operations.

  • Statement of Changes in Owners' Equity: Displays the capital invested in the business by the owners and the profit earned by and retained in the business.

  • Statement of Cash Flows: Displays the cash flows obtained from operating, investing, and financing activities.



Index

Symbols

+ (add), 188

, (comma), 189

{ } (curly brackets), 188

/ (divide), 188

@ (formula), 189

* (multiply), 188

? (parameter), 189

( ) (parentheses), 188

. (period), 188

"" (quotation marks), 189

# (running total), 189

% (SQL expression), 189

[ ] (square brackets), 188

– (subtract), 188

(summary), 189



Index

A

accessing,

data, 9–12, 22–23, 37

database fields, 6, 41–44

formula fields, 41, 186

group name fields, 41, 145

parameter fields, 41, 210

running total fields, 41, 161–164

special fields, 41, 88–90

summary total fields, 154–156

accounting,

asset accounts, 382

basic principles, 381

cycle, 385

formalized reports , 385–386

liabilities, 383

owners ' equity, 383

recording transactions, 384

ACT! 3.0 node, 20

activating Field Explorer, 40

ActiveX Data Objects (ADO) node, 21

Add Command to Report dialog box, 269

adding,

charts , 219

database objects to reports, 42, 61–64

formulas, 190–199

group name fields, 144–145

links to tables, 114

maps, 231

multiple filters to reports, 129

parameter fields, 206–217

running totals, 161

single filters to reports, 126

space to sections, 47–53

special fields, 88

subreports, 242–253

summary reports, 165

summary totals, 146–147

tables to reports, 118

text objects, 75

additional functions, 362–374

ADO (ActiveX Data Objects) node, 21

Advanced Edition Crystal Reports, 255

advantages,

data charting tools, xvii–xiii

exporting functionality, xv

Formula Workshop, xvi–xvii

report wizards, xv–xvi

reporting templates, xiv

alert functions, 362

application menus , 25–26

application toolbars

Expert Tools, 32–34

Formatting, 29–30

Insert Tools, 30–32

Standard, 27–28

applications

Advanced Edition Crystal Reports, 255

Adobe Acrobat Reader, 256

Crystal Enterprise, 256

Crystal Infoview, 21

Developer Edition Crystal Reports, 255

Microsoft Access, 7, 21, 107

Microsoft Excel, xv, xix, 256–257

Microsoft Outlook, 21, 256–257

Microsoft SQL Server, 107

Microsoft Word, xv, xix, 17, 256–257

Oracle, xiii, 7, 107

Paradox, 7

PeopleSoft, xiii

Report Application Server (RAS), 256

SAP, xiii

Standard Edition Crystal Reports, 256

applying

formatting to report objects, 77

templates, 69

arithmetic

financial functions, 317–336

formula operators, 188

math functions, 307–308

array functions, 362