The Accounting Information System
The system of collecting and processing transaction data to financial information is known as the accounting information system.
The Accounting Cycle Summarized
A summary of the steps in the accounting cycle shows a logical sequence of the accounting procedures used during a fiscal period:
1. Enter the transactions of the period in appropriate journals.
2. Post from the journals to the ledger (or ledgers).
3. Take an unadjusted trial balance (trial balance).
4. Prepare adjusting journal entries and post to the ledger(s).
5. Take a trial balance after adjusting (adjusted trial balance).
6. Prepare the financial statements from the second trial balance.
7. Prepare closing journal entries and post to the ledger(s).
8. Take a trial balance after closing (post-closing trial balance).
9. Prepare reversing entries (optional) and post to the ledger(s).
This list of procedures constitutes a complete accounting cycle that is normally performed in every fiscal period.
1 Identifying and Recording Transactions and Other Events