Financial Management (Recording Business Transactions)

A series of sequential steps or procedures performed to accomplish the accounting process.

(a)  

(During the accounting period)

Aim: To gather information about transactions or events generally through the source documents

• Step 1 – Identification of Events to be Recorded

• Step 2 – Transactions are Recorded in the Journal

• Step 3 – Journal Entries are Posted to the Ledger

• Step 4 – Preparation of a Trial Balance

(During the accounting period)

Aim: To record the economic impact of transactions on the firm in a journal, which is a form that facilitates transfer to the accounts

• Step 1 – Identification of Events to be Recorded

• Step 2 – Transactions are Recorded in the Journal

• Step 3 – Journal Entries are Posted to the Ledger

• Step 4 – Preparation of a Trial Balance

(During the accounting period)

Aim: To transfer the information from the journal to the ledger for classification.

• Step 1 – Identification of Events to be Recorded

• Step 2 – Transactions are Recorded in the Journa

• Step 3 – Journal Entries are Posted to the Ledger

• Step 4 – Preparation of a Trial Balance

(At the end of the accounting period)

Aim: To provide a listing to verify the equality of debits and credits in the ledger

• Step 4 – Preparation of a Trial Balance

• Step 5 – Preparation of the Worksheet including Adjusting Entries

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

(At the end of the accounting period)

Aim: To aid in the preparation of financial statements

• Step 4 – Preparation of a Trial Balance

• Step 5 – Preparation of the Worksheet including Adjusting Entries

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

(At the end of the accounting period)

Aim: To record the accruals, expiration of deferrals, estimations and other events from the worksheet

• Step 4 – Preparation of a Trial Balance

• Step 5 – Preparation of the Worksheet including Adjusting Entries

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

 

(At the end of the accounting period)

Aim: To provide useful information to decision-makers

• Step 4 – Preparation of a Trial Balance

• Step 5 – Preparation of the Worksheet including Adjusting Entries

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

(At the end of the accounting period)

Aim: To close temporary accounts and transfer profit to owner’s equity

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

• Step 8 – Closing Journal Entries are Journalized and Posted

• Step 9 – Preparation of a Post-Closing Trial Balance

 

(At the end of the accounting period)

To check the equality of debits and credits after the closing entries

• Step 6 – Adjusting Journal Entries are Journalized and Posted

• Step 7 – Preparation of the Financial

  Statements

• Step 8 – Closing Journal Entries are Journalized and Posted

• Step 9 – Preparation of a Post-Closing Trial Balance