Respond to the following in a minimum of 175 words:
We will continue our study this week of the accounting cycle for a service based company. Keep in mind the steps in the accounting cycle as we work through each week:
- Analyze business transactions
- Journalize the transactions
- Post journal entries to general ledger accounts
- Prepare a Worksheet
- 4aPrepare a Trial Balance in the Worksheet
- 4bRecord Adjusting Entries in the Worksheet
- 4cPrepare Adjusted Trial Balance in the Worksheet
- 4dComplete and Balance the Balance Sheet and Income Statement columns in theWorksheet
5.Prepare the Four Basic Financial Statements (Income Statement, Owners Equity, Balance Sheet and Cash Flow) using data from the Worksheet
6. Record the adjusting entries in the General Journal and post to Ledger Accounts.
7. Record Closing Entries in General Journal and post to Ledger Accounts
8. Prepare Post-closing Trial Balance
9. Review the Financial Statements and Interpret the financial information
Last week we analyzed business transactions using the T account. This has prepared us to learn about the second step in the accounting cycle this week – journalizing the transactions in the General Journal.
As the full-time bookkeeper, your job is to make sure all transactions are recorded properly. If there is an error, each correction needs the reason for the change and the effect on each account, whether it is an increase or decrease.
What are some examples of transactions that would need to be recorded or journalized? Can you provide an example of a transaction and the journal entry from either Chapter 4 of our textbook or from your current employer? Why is it important to accurately record the transaction you selected?
Can you think of any events that where no entry would be recorded?
Suppose, a co-worker has recorded a cash receipt twice and wants you to record a correcting entry that will reverse the mistakes. The correcting entry will record a credit to the Cash account and a debit to the Sales account. Your co-worker has offered to buy you dinner for fixing this mistake.
What should you investigate before making a decision about the correcting entry? What is happening to the Cash account? Would you accept a dinner offer from your co-worker for fixing the mistake?