![]() ![]() ![]() They create worksheets for account by account, which whether it's depreciation or accruals or what have you, they'll do that. They go through the trial balance and identify what transactions have to be made as adjusting transactions. Then what you would do, and this is more of an accountant versus a bookkeeper. Eventually at the end of your reporting period, then let's just assume that it's a year, you'll always have a trial balance as you go along, but you'll have at the end of the year for that, let's say it's calendar year January to December entries that effect that trial balance and that's called an unadjusted trial balance, and per the accounting equation, debits equal credits in the trial balance. Once you've posted it, the third step is to view what you've done in the general ledger, which is the entire list of accounts on the chart of accounts and the transactions that affect them one by one. For purchases, you might do purchase orders or bills or what have you, so that would be the next step. I mean, if you were doing it old school on ledger paper fine, you'll be doing it there in journal entries, but we're assuming you're using software and you'd record those entries in some kind of transaction, whether it's a general journal entry or in QuickBooks, you might want to use an invoice for a sale or a sales receipt. Then the next step is to record those into your software. The first thing you're going to do is identify the transactions that need to be entered and that could be a sale or a refund or a bill from a supplier, whatever. The accounting cycle is made up of eight major steps and this can be massaged and modified for any individual situation. But don't take my word for it, let's hear from an expert as they discuss the accounting cycle and its importance for new bookkeepers. As a new bookkeeper, the accounting cycle is also helpful because it tells you what your role is during each step. I know we talked a little bit about this in an earlier lesson when we talked about the account equation and entering transactions into your journal and ledger. Now that I have Lou checking out lawnmowers, let's talk a bit more about the accounting cycle. Okay? How about you go source some new hardware for your big contract? That's a good idea. At this rate, I'll have those financial reports for the bank by dinner. Bianca, this QuickBooks thing is awesome.
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