Efficiency and organizational effectiveness are required of any accounting system. These attributes start with the accounting cycle, consisting of an orderly series of steps leading to the preparation of financial statements, and the closure certain accounts in preparation for the next accounting period and the start of a new cycle.
The procedures in the accounting cycle are routine and a mechanical process. The steps in the cycle follow the same sequence regardless of system (manual or computerized) in place. No matter how routine or mechanical, performing the procedures requires thorough knowledge of important principles and concepts, primarily those involving the accounting equation, elements of financial statements, the normal balance, and the rules of debit and credit. Without this knowledge, the steps in the accounting cycle become unnecessarily difficult to perform efficiently.
The accounting cycle consists of three stages: preparation, summarization, and closing. At the preparation stage, transactions are entered into the General Journal, or the book of original entry. The step is called journalizing. This is after considering recognition and measurement principles. In the posting step, journal transactions are posted to the General Ledger, also known as the book of final entry. The last step in this stage is the preparation of the unadjusted trial balance, which is a summary table of the ending balances of the accounts in the general ledger. The trial balance proves the equality of debits and credits.
The summarization involves three steps: adjustments, preparation of an adjusted trial balance, and preparation of the financial statements. During the adjustment step, adjusting entries are made to correct the unadjusted balances for errors or omissions, and bring the accounts up to date. The adjusted trial balance is a revised trial balance showing the adjusted account balances, which will be carried to the financial statements. An optional procedure is the preparation of a 10-column worksheet that facilitates the preparation of the financial statements.
The closing stage involves steps to close the nominal accounts and reduce these to zero balances. After the closing entries, the only open accounts are the real or balance sheet accounts that will be carried forward to the next reporting period. The post-closing trial balance shows the final ending balances of accounts in the statement of financial position, to be carried forward to the next cycle. As an optional procedure, reversing entries are made to reverse some adjusting entries made previously.
This is a 30-minute, 20-item quiz and allows five attempts. Score sixteen correct answers (80%) at least once to earn a certificate. You can skip questions for later review but items unanswered upon submission are counted as incorrect. Take the quiz when you are certain of your familiarity with and understanding of the course contents. You may view statistics for the course in your profile page.
0 of 27 Questions completed
Questions:
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading…
You must sign in or sign up to start the quiz.
You must first complete the following:
0 of 27 Questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 point(s), (0)
Earned Point(s): 0 of 0, (0)
0 Essay(s) Pending (Possible Point(s): 0)
Some accountants prepare this to serve as a draft for the posting of adjustments, before final posting to the general ledger.
Match the step with the stage in the preparation cycle
|
Preparation stage
|
|
|
Summarization stage
|
|
|
Closing procedures
|
|
Match the step with the stage in the accounting cycle
|
Closing procedures
|
|
|
Summarization stage
|
|
|
Preparation stage
|
|
Match the step with the stage in the accounting cycle
|
Closing procedures
|
|
|
Preparation stage
|
|
|
Summarization stage
|
|
Sort the steps in the accounting cycle in proper sequence.
View Answers:
Which of the following steps are performed at the preparatory stage of the accounting cycle?
The phase in the accounting cycle that involves actual recording of transactions in the books of accounts.
Which of the following steps are performed at the summarization stage of the accounting cycle?
What step in the accounting cycle summarizes the transactions in the general journal, according to the accounts in the general ledger?
Which of the following are performed during the closing procedures?
It is also called the book of original entry because it is where all transactions are first recorded.
Which procedures below are optional
It is also called the book of final entry. Entries from the general journal are posted here.
Worksheet preparation is necessary ina order to prepare financial statements.
The first trial balance prepared during the accounting cycle is the
The accounting cycle ends after posting to the General Ledger, being the book of final entry.
This step involves making entries to correct errors, bring accounts up-to-date and determine correct balances.
When the trial balance have equal amounts of debit and credits, it means all accounting transactions have been entered correctly.
This characteristic of accounting is evident in the accounting cycle where it follows a defined series of steps with clear procedures.
The book of original entry is the General Journal.
It is the basis for the preparation of financial statements.
The book of final entry is the General Ledger.
It is the basis for the preparation of financial statements.
When the post-closing trial balance is prepared, the accounts that remain are the
This merely proves that the sum of debits and credits are equal, in accordance with double entry accounting.
What step in the accounting cycle summarizes the transactions in the general journal, according to the accounts in the general ledger?
This will show the final balances of real accounts to be carried forward to the next accounting period. Nominal accounts do not appear because these have been closed in the previous step.
| Cookie | Duration | Description |
|---|---|---|
| cookielawinfo-checkbox-analytics | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". |
| cookielawinfo-checkbox-functional | 11 months | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". |
| cookielawinfo-checkbox-necessary | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". |
| cookielawinfo-checkbox-others | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. |
| cookielawinfo-checkbox-performance | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". |
| viewed_cookie_policy | 11 months | The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. |
