Accounting lesson

The 4 Stages of the Accounting Process

by:

​ETHAN

​​JARED

​SAMUEL

​​ISAAC

Multiple Choice

On Balance Day, wages of $1,200 are owed but not yet paid. What is the correct Balance Day adjustment?

• Dr Wages Expense $1,200, Cr Cash $1,200

• Dr Wages Payable $1,200, Cr Wages Expense $1,200

• Dr Wages Expense $1,200, Cr Wages Payable $1,200

• No adjustment is needed

1. Source documents

2. Recording stage

3. Reporting stage

4. Advice stage

What it consist of?

The accounting process is a cycle that helps businesses record, summarise, and report financial information.

What it is?

What's the accounting process?

Multiple Choice

Source Document stage

A sole trader sells goods for cash. Which source documents should be issued?

• Invoice.

• Cheque butt.

• Receipt.

• Memo.

• Invoice: Used for credit sales, not cash sales.

• Cheque butt: Records cheque payments, not cash received.

• Memo: An internal document, not for cash sales.

Types of Source Documents

The source document stage is the first step in the accounting process, where original records of transactions are created as proof of business activities.

What it is?

Source Documents

Multiple Choice

Recording Stage

What is the main purpose of the recording stage in the accounting process?

• Preparing financial reports for stakeholders.

• Classifying and summarizing transactions into journals and ledgers.

• Collecting receipts and invoices from transactions.

• Providing financial recommendations to the business owner.

The recording stage of the accounting process helps the business in many ways.
- Provides a systematic and organized way to capture all financial transactions that occurs.
- Allows for accurate tracking of the five elements in accounting (Liabilities, Assets, Owner equity, Expense and Income)
- All these benefits of the recording stage of the accounting process proves to serve one main benefit - that being it helps the business make informed business decisions.

How does the recording stage help the business?

The recording stage is the second stage of the accounting process where financial data is sorted, classified and entered into a journal, then it is to be summarised and posted to ledgers.

There are three accounting records that are used to generate financial information.

Accounting records:
- Journal
- Ledger
- Trial balance

What is the recording stage?

Recording Stage

Multiple Choice

Reporting Stage

Which financial statement shows a business' financial position at a specific date?

• Income Statement.

• Balance Sheet.

• Cash Flow Statement.

• General Journal.

· Cash Flow Statement - Reports cash inflows and outflows · Income Statement - Shows profitability over a period  · Balance Sheet - Displays assets, liability, and owner's equity at a specific time

Financial statements

To encapsulate and present financial information 

What is Reporting?

Reporting Stage

Multiple Choice

Advice Stage

What is the key purpose of the advice stage in the accounting process?

• To collect financial documents from suppliers.

• To record transactions in the General Ledger.

• To prepare invoices for customers.

• To provide recommendations to improve business performance.

Accountant provides recommendations to the business owner based on the financial reports.

What?

Advice Stage

Examples of advice told:

• Offer bundle deals

• Buy in bulk to get supplier discounts.

• Buy a delivery van

Thank you very much!

We hope you learnt something today.








- Ethan, Jared, Samuel, Isaac