Chapter 6: The Accounting Cycle

Question 1

6 Basic steps in the accounting cycle

Answer 1

• Capturing data on source documents
• Recording of transactions in journals
• Posting to the ledger accounts
• Prepare a trial balance
• Adjustments and corrections of errors
• Prepare financial statements

Question 2

Journals

Answer 2

Books of first entry.
They are the books for first recordings of source documents.
The journal links the source document with the general ledger by creating a way by which a transaction can be traced from its source to its processed form and vice versa.

Question 3

Ledger

Answer 3

A collection of all accounts.

Question 4

General ledger contains…

Answer 4

Asset
Liabiliy
Capital
Income
Expense accounts

Question 5

Trial balance

Answer 5

A list of all the accounts in the general ledger and their balance/totals.
It tests the double entry system as well as the accounting accuracy of entries.