Full accounting procedure

Question 1

what is the full accounting procedure

Answer 1

0. opening
1. (re) opening entries
2. ordinary entries
3. trial balance (entries)
4. trial balance (balances)
5. balance sheet or P&L
6. closing of P&L
7. closing entry

Question 2

0. opening

Answer 2

opening BS showing all assets, liabilities and equity from last year.
- ensure assets = liabilities + E

Question 3

2. (re)opening entries

Answer 3

multiple entries into the journal to open the situation accounts closed at the end of the previous financial year
- will be transferred to new general ledger

! reversed positions of closing entry from previous year

Question 4

2.ordinary entries

Answer 4

entries made throughout the year to reflect the various accounting events that occur and transferred to general ledger

Question 5

3.trial balance (entries)

Answer 5

need to add debit and credit columns of the journal to make sure all the entries in the opening are inlcuded in end of period / total debits = total credits
+ checking if general ledger is correct -> list all ledger accounts + seeing if all debits/credits in trial balance (entries -> column b = column c)

Question 6

4.trial balance (balances)

Answer 6

verifying all accounts are correctly balanced
- from general ledger, subract smaller value from larger one for each account and put value into balance account
- add all debit and credit balances -> totals still need to be equal

Question 7

5.balance sheet or IS

Answer 7

BS:
- debtor -> assets
- creditor -> NE+Liabilities

IS:
- debtor-> losses
- creditor-> profits

Question 8

6.closing of IS

Answer 8

to transfer net income for the period into a single account: Net income for the year
- all management accounts then closed
- transfer to general ledger and put into final BS
-> becomes opening equity for next year

Question 9

7.closing entry

Answer 9

closing all accounts that remain open -> an entry is placed for all accounts on opposite side of existing balance
- brings accounts to 0