ACCOUNTING CYCLE
The sequence of accounting procedures used to record,classify.and summarize accounting reports
in financial reports at regular interval is often termed the accounting cycle.
The accounting cycle begins with the initial recording of business transactions and concludes with the preparation of a complete set of formal financial statements.
JOURNAL
The journal is a chronological day by day record of business transactions.After that the debit and credit amounts recorded in the journal are posted to the accounts in ledger.
LEDGER
An accounting system includes a separate record for each item in the financial statements.For example a separate record is kept for the cash and similarly for every other asset,liabilities,owners equity etc.
POSTING
Posting means updating the ledgers account for the effect of the transaction recorded in journal.
BALANCE OF A T - ACCOUNT
THE balance of an account is a difference between the debit and credit entries in the account.If the debit total exceeds the credit total,then it has a debit balance.If the credit total exceeds the debit total the account has a credit balance.
EQUALITY OF DEBITS AND CREDITS
ASSETS = LIABILITIES + OWNERS EQUITY
Any change in the left side of the equation asset will be lead an equal change in the right side either liabilities or owners equity.
The sequence of accounting procedures used to record,classify.and summarize accounting reports
in financial reports at regular interval is often termed the accounting cycle.
The accounting cycle begins with the initial recording of business transactions and concludes with the preparation of a complete set of formal financial statements.
JOURNAL
The journal is a chronological day by day record of business transactions.After that the debit and credit amounts recorded in the journal are posted to the accounts in ledger.
LEDGER
An accounting system includes a separate record for each item in the financial statements.For example a separate record is kept for the cash and similarly for every other asset,liabilities,owners equity etc.
POSTING
Posting means updating the ledgers account for the effect of the transaction recorded in journal.
BALANCE OF A T - ACCOUNT
THE balance of an account is a difference between the debit and credit entries in the account.If the debit total exceeds the credit total,then it has a debit balance.If the credit total exceeds the debit total the account has a credit balance.
EQUALITY OF DEBITS AND CREDITS
ASSETS = LIABILITIES + OWNERS EQUITY
Any change in the left side of the equation asset will be lead an equal change in the right side either liabilities or owners equity.
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