Accounting Is The Process Of Identifying, Recording And Communicating Information

807 WordsApr 14, 20174 Pages
Accounting is the process of identifying, recording and communicating information to interested users. Financial Statements, such as the balance sheets, income statements, etc. must follow GAAP or United Stated GAAP. GAAP or Generally Accepted Accounting Principles is a set of principles that gives accountants guidance when performing the accounting cycle. The accounting cycle is a lengthy process. The eight steps in the accounting cycle are as follows: identify the transactions, journalize the transactions, post it to the ledger, unadjusted trial balance, adjusting entries in the worksheet, adjusted trial balance, generate financial statements and then close the entries. Before the invention of the computer, accountants performed the…show more content…
This information can then be used to assess whether a business is losing revenue or gaining revenue and the changes it needs to make to counteract the loss. Balance sheets shows all the companies assets, liabilities and owner’s equity. Assets minus liabilities will equal owner’s equity. The owner’s equity is what is left over for the owner that can choose to invest in the business or use it for himself, but is considered a business transaction. A trial balance worksheet consists of the unadjusted trial balance, adjustments and the adjusted trial balance. The unadjusted trial balance does not include adjustments or transactions that were made at the time the worksheet was prepared. The next step is to make the adjustments to the appropriate accounts. Take for example, if I had supplies that totaled two hundred dollars that was debited and the adjustments called for a debit to one hundred dollars, I would add the two numbers together to get three hundred dollars which becomes my final adjusted trial balance. QuickBooks is another software that is used mainly by sole proprietors and small law firms that is just starting off in its business. It organizes the financial information by putting the firm’s income, expenses, and receivables in one place. It also has a payroll section that allows the employer to easily and accurately handle payroll of its employees. It’s also useful in compiling information that the
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