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What are the steps in completing the accounting cycle? How do the different steps affect the financial statements? What is the effect on the financial statements of missing a step when completing the accounting cycle?
Weegy: It would depend on which step you miss. [ If you fail to make year end adjusting entries, your inventory account will probably be over-stated, supplies expenses may be over-stated if supplies are expensed directly, accumulated depreciation will be under-stated, and so on and on... there is no way to tell from the the information given in your question. ] (More)
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Asked 10/23/2012 8:56:16 AM
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What are the steps in completing the accounting cycle? How do the different steps affect the financial statements? What is the effect on the financial statements of missing a step when completing the accounting cycle?
Weegy: steps in the accounting cycle: 1. Identify the transaction and find locate its source document. 2. Record the transaction in the general journal and related journals. 3. Post transactions to the ledger accounts. 4. Prepare the trial balance. 5. [ Make sure the trial balance totals are equal. 6. Prepare any adjusting entries in the trial balance. 7. Create an adjusted trial balance. 8. Create your financial statements. 9. Prepare the closing journal. 10. Post to the general ledger. 11. Create the after-closing trial balance. Accounting Cycle If you comb through a company’s accounting cycle, you see the tools, tactics and strategies the business deploys to record economic events, review them for data accuracy and completeness and ensure regulatory conformity. The last item means taking tangible steps to evaluate a transaction, determine how to record and report it and find the accounting rule that applies under the circumstances. This distinctive approach is important because a financial institution - such as a bank - doesn’t record inventory the way a manufacturing firm does, for example. Financial Statements In the modern economy, companies often evolve in a competitive culture obsessed with measuring leadership on fronts as diverse as solvency, profitability, liquidity and fundraising prowess. To evaluate this quartet of indicators, the respective data summaries are a statement of financial position, a statement of profit and loss, a statement of cash flows and a statement of changes in shareholders’ equity. A solvent company has a positive net worth - meaning more assets than debts. “Profitable” is a term finance people ascribe to a business with more revenues than expenses. To learn more about a company’s liquidity, delve into its statement of cash flows and heed things like operating, investing and financing activities. ] (More)
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Asked 10/23/2012 8:58:01 AM
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What are the steps in completing the accounting cycle?
Weegy: The answer are, Transactions, Journal entries, Posting, Trial balance, Worksheet, Adjusting journal entries, Financial statements and Closing the books. the steps in completing the accounting cycle are Transactions, Journal entries, Posting, [ Trial balance, Worksheet, Adjusting journal entries, Financial statements and Closing the books. ] (More)
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Asked 10/23/2012 9:03:38 AM
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What are the pros and cons of using reversing entries? Why are reversing entries optional?
Weegy: Reversing Entries An entry that requires reversing includes amounts entered into the accounting system to allocate expenses that span two accounting periods. [ For instance, if an invoice for an interest-only loan payment is due each month on the 15th, only one-half of the entry applies to the current month, while the other half of the entry applies to the next month. To accommodate this transaction, the accountant would expense half of the amount in the current month and make an adjusting entry for the second half of the amount. At the beginning of the next month, the accountant would need to reverse the adjusting entry to clear the account. The advantage of using reversing entries is that it allows the accountant to reflect expenses in the period they occur. Accruals Accountants create entries for expense items not received. For instance, if you billed a client for $500, but needed to pay a vendor $100 for completing the work for that invoice and didn’t receive the vendor invoice, you need to accrue for it. The purpose is to ensure that for the revenue generated, the expenses are recorded as well. For the month you billed the client $500, you would accrue an expense of $100 for the vendor, which requires a reversing entry in the next month. However, when you accrue and reverse entries, you cannot forget to make the reversing entry or your expense account will be overstated. A disadvantage of using reversing entries is the possibility that you will forget to make them. Sponsored Links i-bizup.com Web-based Management Software (Data Accessible Anytime, Anywhere) Double Work Making reversing entries requires a system for tracking them to ensure they complete successfully. Without tracking reversing entries on a spreadsheet, you won’t know what to reverse in the next period. Accounting systems that require you to enter reversing entries manually require the accountant to do double work. For every entry made that requires reversal in the next period, the ... (More)
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Asked 10/23/2012 9:08:09 AM
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• Commercial accounting and generally accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis. Describe both bases of accounting and explain the differences.
Weegy: Commercial accounting and generally accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis. [ Describe both bases of accounting and explain the differences. Cash basis is used mostly by small businesses where owners and creditors want a simple way to understand the financial statements. Cash basis is used when a company or creditors does not worry about the accuracy of the statements but just want to understand if there is profit or loss in the company. Revenues are recorded when cash is received and expenses are recorded when cash is payment. Cash basis does not meet the requirements of accounting principles (GAAP) for it does not recognize the revenue principle and matching principle. Accrual basis accounting method is recognized when revenue is earned, and expenses accrued. Other accounts have to be created to show the difference between and recognized revenue or expenses and the receipt of cash when disburse. Accrual basis accounting is used by the large businesses in the United States, Canada, and in most foreign countries for the statements is prepared according to the generally accepted accounting principle (GAAP). Most businesses use the accrual statements like the GAAP to get loans from banks and get a better focus on the company’s business for the future. So the accrual accounting is necessary for small companies and a private company that what to focus on their outlook for the future. Some company’s prefers not to use the accrual basis for it is costly and some do use it for it shows the loss and profit of the company. ] (More)
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Asked 10/25/2012 9:23:33 AM
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