Professional Documents
Culture Documents
BY Naveen. Rohatgi
CA.CS.ICWA.MBA
INTRODUCTION
Management
Shareholders
Prospective investors
Lenders
Suppliers (Creditors)
Customers
Employees
Government
Researchers
Accounting Principles:
Consistency
Materiality
Disclosure
Going concern
Cost concept
Money measurement concept
Accrual concept
Periodicity concept
Matching Concept
Realization concept
Verified evidence concept
STEP S IN ACCOUNTING CYCLE
Accounting cycle is a process which involves following steps.
Step1 Journalizing. Under this step the transactions are
identified and recorded journal book by providing two effects
as per double entry book keeping system. Journal" is the book
of prime entry.
Step 2- Posting: It is the second step in accounting cycle.
Under this step the transactions recorded in journal are posted
to respective ledger accounts opened specifically for the
purpose.
Step 3- Balancing: Under this step separately prepared ledger
accounts are totaled and balanced for understanding the
position of individual ledger account. A ledger account may not
have any balance or may either have debit balance or credit
balance
Step 4- Trial Balance: After balancing all ledger accounts a
trial balance is prepared which is generally defined as list of
debit and credit balances of ledger accounts. Trial balance
should always tally.
Step 5- Preparation of financial statements: This is the
final step in the accounting cycle. Under this step profit and
loss account is prepared to understand the profitability
whereas balance sheet is prepared to know the financial
position of the business.