Accounting process

Accounting ProcessBy

Rama Krishna Angirekula

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Accounting Process Introduction:

• Accounting process is used to know the procedure behind the preparation of financial statements. An accountant will be able to know all the steps involved in the preparation of book of accounts.

Process:

Business transactions

• The accounting process starts with identifying and analyzing business transactions and events.

Journal entries:

• Business transactions are recorded using the double-entry bookkeeping system. They are recorded in journal entries containing at least two accounts (one debited and one credited).

Ledger

• Also known as Books of Final Entry, the ledger is a collection of accounts that shows the changes made to each account as a result of past transactions, and their current balances.

Trial Balance:

• It is a statement which shows the accuracy of accounting. This is to test if the debits are equal to credits after adjusting entries are made.

Financial Statements:

• Known as Final Accounts. The financial statements are the end-products of an accounting system. By using these statements management will know about their financial status as well as profit.

Conclusion:

• The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. Because this process is repeated each reporting period, it is referred to as the accounting cycle.