Question

Introduction (delete this heading in your final paper)
[In your opening paragraph, very briefly introduce the purpose of your paper. Recall that you will be discussing the accounting cycle in keeping with the key terms of steps, outputs, and importance, as explained in your rubric instructions. Three or four sentences will be sufficient.]
Paragraph One (delete this heading in your final paper)
[Using your textbook and other provided course resources, identify the steps of the accounting cycle. Provide a description of each step in your own words, using specific examples.]
Paragraph Two (delete this heading in your final paper)
[Identify and describe the major products of the accounting cycle. Why are they important? Explain the purpose of each financial statement, including how they are interrelated. A minimum of five to six sentences is required to support your thoughts. Be specific in your answer and use examples to support your thoughts.]
Paragraph Three (delete this heading in your final paper)
[Defend the importance of the accounting cycle to a business. Specifically, Discuss why specific steps are necessary. Include in your discussion at least three different steps. A minimum of five to six sentences is required to support your thoughts. Focus your thoughts on the role of each step, as discussed in the second paragraph, and what each step contributes to the overall accounting process.]
Conclusion (delete this heading in your final paper)
[The conclusion reminds the reader what your paper is about and allows you to make a final point without introducing new information. Three or four sentences will be sufficient.]
 

Answer 1

1. Accounting cycle:

The entire cycle focuses on collecting and summarizing financial information finally presenting it to the top management for taking decision making from their end

Steps in accounting cycle:

• Transaction
• Journal
• Ledger
• Trail balance
• Balance sheet
• Cash flow
• Statement of financial position
• End of financial period closing

Journal: Journal is Logging of Transactions in company book which would have DEBIT & CREDIT balance. Example for cash sale would be cash account (Which will be debited since money is coming in) and credit sales account (since a product is sold out)

Ledger: posting of these Transactions to individual ledger account. Like cash account and sales account

Trail balance: This would show the total of debit and credit balances based on ledger posting and recorded in relevant side, for differences suspense account would be created.

Balance sheet: This reflects the financial position of the company , which records both company assets and liabilities and profits are accounted based on P& L.

Cash flow: A typical cash flow statement gives projection of Cash inflow and cash out flow also states how much cash affected from operating activities , financing activities and investing activities

Statement of Financial position: Helps to find out profit or loss based on expenses and income and Trading account

IMPORTANCE OF ACCOUNTING CYCLE TO any BUSINESS

• Helps in analysis of the company
• How much the company owe to others and what are the debts to the company can be Tracked by properly maintaining journals and recording transactions
• Financial reports helps in accurate information which is helpful for future planning also
• Trail balance helps to spot errors and rectify
• Helps to fix working capital of the company by keeping a eye on cash flow