Accounting Data Generation

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by BRIAN SAPP1 view·Updated Sep 4, 2021
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  1. Hello. And today we're going to go over the eight
  2. steps in the accounting cycle.
  3. Yeah. So to start what is a general ledger and
  4. why is it important to the accounting cycle?
  5. The general ledger is conceivably the eyes and the ears
  6. for bookkeepers and accountants.
  7. This is the way that business identifies how they are
  8. keeping track of how the money is spent, how it
  9. is saved, how it comes in and what it's being
  10. used for.
  11. Yeah. So to think of this A biblical quote from
  12. Proverbs 21-21 5 is the plans of the diligent lead
  13. surely to abundance that everyone who is hasty comes only
  14. to property as a great way to think of our
  15. application in the accounting cycle.
  16. We want to make sure that we are doing our
  17. due diligence to make sure that all steps are identified
  18. and moving along correctly.
  19. So the first step yeah.
  20. Is the analysis of transactions now why this is important
  21. to all employee levels is businesses need to understand the
  22. cost of doing business.
  23. These steps are the activity of identifying transactions.
  24. Mhm. Yeah.
  25. Yeah. Moving into step two.
  26. Yeah. Think yeah.
  27. Is journal izing the transactions.
  28. So best way to describe this is, is the careful
  29. attention to documenting each transaction as they occur and lead
  30. to accurate bookkeeping.
  31. We don't want to put Yeah our next step is
  32. posting the journal entries.
  33. This determines where each transaction lives in our general ledger.
  34. Yeah. Think of this as doing your home budget and
  35. making sure that you are putting money in for each
  36. utility that you pay and every other facet that you
  37. have to spend money on.
  38. Mhm step forward is preparing a trial balance.
  39. So a trial balance is just that everyone needs to
  40. understand the trial balance is where you identify your mistakes
  41. if they're already.
  42. This will show an unadjusted transaction balance and allows you
  43. to identify the errors.
  44. Think of this as doing this in pencil versus pen,
  45. this is your opportunity to correct those mistakes and move
  46. forward. Mm In step five were actually preparing our financial
  47. statements. We use this worksheet and its purpose is to
  48. make sure that all the credits and debits are matching.
  49. We want to make sure that our balanced at the
  50. end is what it is supposed to be.
  51. Yeah, yeah, yeah.
  52. Step six is to go back and make sure that
  53. the adjusted balances match what we have done again for
  54. any level of employee, whether it is entry level mid
  55. level manager or executive.
  56. We want to make sure that the necessary adjustments are
  57. corrected and any unbalanced transactions are corrected.
  58. We cannot generate proper statements if those are not identified
  59. and corrected.
  60. Step seven is the production of our financial statements.
  61. Once the balances are adjusted and the process of preparing
  62. statements can begin.
  63. Those include our independence statements are balance sheets and our
  64. cash flow summary.
  65. Again any level of employee, whether it is executive level,
  66. midlevel marketing manager or entry level we'll be able to
  67. understand how the money comes in, what is being used
  68. for, and more importantly, how it goes back out.
  69. Last is we close our books for this statement, as
  70. we have now completed our monthly analysis.
  71. If that is the case, we are now able to
  72. close this month cycle and repeat for the next.
  73. Once we are doing this, it becomes a very consistent
  74. operation.