Accounting Cycle

The invoice rung is a strategyatic process utilize to help bring about the basic function of write up, which is to identify, record, and communicate information. A business or transcription whitethorn read its own unique way of performing its accounting cycle, but each must perform the task in ace way or another. Alv arz Bookkeeping Services, a small family operated business, has a in truth change version of the accounting cycle. The company was established in 1971 and is fit(p) in Flushing, NY.The company is consists of four employees this includes the owner. One person, the owner, performs the entire accounting cycle for the Alvarez Bookkeeping Services. Gradually, the accounting cycle has evolved much like business scram evolved the multiple steps have been reduced as technology has simplified the process, today, most companies use accounting software that processes many of these steps at the same time (Averkamp, n. d. , para. 3).The accounting cycle consists of ide ntifying, journalizing, posting, trail brace, modify entries, adjusted footrace balance, preparing pecuniary statements, closing, post-closing trial balance, reversing entries, and financial statements (Kieso, Weygandt, & Warfield, 2007). Identifying a transaction or fount is the first step in the cycle businesses engage in different activities on a daily, as a result, determining when to record and application is crucial. Once the activity is identified a transaction must be recorded, the next step is to journalize the transaction.The journalizing process can be completed in a variety of ways the most common method is the commonplace journal, although whatsoever companies keep other special journals. The next step in the accounting cycle is posting, which is the procedure of transferring journal entries to the ledger accounts (Kieso et al. , 2007), so that the minutes reflect in the appropriate ledger accounts balances. After the transactions from the ecumenical journ al have passed to the general ledger a trail balance can be performed. The trial balance lists accounts and their balances at a disposed time (Kieso et al., 2007, pg. 74), which is very useful in detecting errors that may have occurred during recording or posting. In the event an error is detected or a transaction is missing, an adjusting entry is do. Adjusting entries may also be do to update an account, such as prepaid accounts. For instance, a company may have pre-paid insurance on its books as assets, at the end of the accomplishment an adjusting entry is made to reflect what is prepaid and what an expense is. Often measure a trial balance is done after the adjusting entries are made just to be sure everything is still in balance.At this point in the accounting cycle, the financial promulgates are typically generated, the most common are the balance sheet, income statement, and retained winnings. The accounting cycle concludes with the closing entries and closing trial ba lances. The expense and revenue accounts are closed against income summary, which is closed against retained earnings thus, preparing the cycle to start again in the coming period. Today, technology is used often in accounting and has made it easier processing accounting. The way a company processes accounting is changing.Alvarez Bookkeeping Services uses accounting software called Peachtree Quantum has vastly improved the accounting cycle process. The transactions are recorded in the softwares general journal, if the transaction is out of balance the system will not complete the transaction and prompt to balance the transaction, thence eliminating the need for trial balances. Once the transaction is recorded the system automatically posts to proper ledger accounts and also carries the information over to financial statements.If the owner wishes to review how the company is doing, he would run a financial report by selecting the report and forms option selecting the specific repo rt they would like run. Adjusting entries are still necessary, but the accounting cycle has been effectively reduced to identifying, journalizing, adjusted entries, financial statements, and closing. The accounting cycle is proven methodical system is practiced in performing accounting tasks at Alvarez Bookkeeping Service.The role of raft and systems in the cycle has changed the way companies perform the accounting cycle some companies have departments specified for specific tasks of the cycle, whereas Alvarez Bookkeeping Services has one somebody who does the entire process. Nonetheless, companies have benefited from the advancements in technology and most notably in accounting systems. Accounting systems have expedited the process and given more ideal results, which allow the user to focus on analyzing the information.