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Asset Accounts Acct # Cash Baking Supplies Prepaid Rent Prepaid Insurance Baking Equipment Misc. Supplies Accounts Receivable Accumulated Depreciation Merchandise Inventory 101 102 103 104 105 106 107 108 109 This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you. Liability Accounts Equity Accounts Acct # Notes Payable Accounts Payable Wages Payable Interest Payable he appropriate accounts to record to as you are analyzing and is nothing to complete on this page; this is simply a resource for you. 201 Common Stock 202 Dividends 203 204 Revenue Accounts Bakery Sales Merchandise Sales Expense Accounts Baking Supplies Expense Rent Expense Insurance Expense Misc. Expense Business License Expense Advertising Expense Wages Expense Telephone Expense Interest Expense Depreciation Expense Misc. Supplies Expense Cost of Goods Sold s Acct # 301 302 ts Acct # 401 402 ts Acct # 501 502 503 504 505 506 507 508 509 510 511 512 Peyton Approved General Journal Entries Jul-14 Date Accounts 1-Jul Cash Common Stock Contributed cash for common stock 1-Jul Baking Supplies Accounts Payable 3-Jul Cash Notes payable to record two-year 6% noted payable issued lease agreement 7-Jul Rent expense prepaid rent Cash to record purchase of rent expense 10-Jul Business License Cash to record purchase of business license 11-Jul Miscellaneous Expense Cash to record purchase of cash register 13-Jul Baking Equipment Common Stock to record transfer of baking equipment to business 13-Jul Advertising Expense Cash to record advertising expense incurred 14-Jul Miscellaneous Supplies Cash to record purchase of misc supplies 30-Jul telephone expense Accounts Payable 31-Jul Prepaid Insurance cash salary and wages expense salary and wages payable cash bakery sales Debit 15,000.00 Credit 15,000.00 8,500.00 8,500.00 10,000.00 10,000.00 1,500.00 1,500.00 3,000.00 375.00 375.00 250.00 250.00 5,000.00 5,000.00 200.00 200.00 300.00 300.00 45.00 45.00 1,200.00 1,200.00 120.00 120.00 15,000.00 15,000.00 58,990.00 58,990.00 Peyton Approved General Journal Entries Aug-14 Date Accounts 5-Aug salary and wages payable cash 8-Aug Received payments from customers Accounts receivable 10-Aug accounts payable cash 15-Aug Baking Supplies Accounts Payable 15-Aug salary and wages expense salary and wages payable 15-Aug rent expense cash 18-Aug Received payments from customers Accounts receivable 20-Aug accounts payable cash 20-Aug salary and wages payable cash 22-Aug misc. supplies cash 31-Aug salary and wages expense salary and wages payable telephone expense accounts payable cash bakery sales Debit 120.00 Credit 120.00 3,200.00 3,200.00 45.00 45.00 5,000.00 5,000.00 480.00 480.00 1,500.00 1,500.00 1,000.00 1,000.00 8,500.00 8,500.00 480.00 480.00 300.00 300.00 420.00 420.00 45.00 45.00 20,000.00 20,000.00 41,090.00 41,090.00 Peyton Approved General Journal Entries Sep-14 Date Accounts 1-Sep Dividends cash 5-Sep salary and wages payable cash 7-Sep Merchandise Inventory Cash Purchased inventory 8-Sep Received payments from customers Accounts receivable 10-Sep accounts payable cash 11-Sep Baking Supplies Accounts Payable 13-Sep accounts payable cash 15-Sep salary and wages expense salary and wages payable 15-Sep rent expense cash 15-Sep cash merchandise sales 15-Sep cost of goods sold merchandise inventory 20-Sep salary and wages payable cash 20-Sep merchandise Inventory cash 24-Sep cash merchandise sales Record sale of inventory 24-Sep cost of goods sold merchandise inventory 30-Sep merchandise Inventory cash salary and wages expense salary and wages payable cash bakery sales Debit 3,000.00 Credit 3,000.00 420.00 420.00 60.00 60.00 4,000.00 4,000.00 45.00 45.00 7,000.00 7,000.00 5,000.00 5,000.00 456.00 456.00 1,500.00 1,500.00 68.00 68.00 48.00 48.00 48.00 FIFO 456.00 48.00 48.00 LIFO 48.00 weighted average 456.00 122.00 122.00 153.00 153.00 109.60 109.80 109.60 FIFO 151.25 151.25 480.00 480.00 25,000.00 25,000.00 48,068.85 109.80 LIFO 48,068.85 109.62 109.62 weighted average FIFO Date 7-Sep Purchases 10 $ 6.00 $ Sales 60.00 15-Sep 20-Sep 8 $ 20 $ 6.10 $ 55 LIFO 7-Sep 6.05 $ 151.25 $ 333.25 Purchases 10 $ 6.00 $ 6.10 $ 6.05 $ $ 12.00 97.60 109.60 157.60 4 4 25 29 29 10 6.00 $ 48.00 122.00 151.25 2 2 20 22 18 $ 25 $ 6.00 $ 6.10 $ $ 60.00 24-Sep 30-Sep 26 8 $ 20 $ 2 Sales 15-Sep 20-Sep 48.00 2 20 22 2 $ 16 $ 25 $ 6.00 $ 122.00 24-Sep 30-Sep 10 6.10 $ 109.80 2 2 4 2 55 weighted average 7-Sep $ Purchases 10 $ 6.00 $ 333.25 6.10 $ 10 55 48.00 6.05 $ 151.25 $ 333.25 2 2 20 22 18 $ 25 $ 6.00 $ 122.00 24-Sep 30-Sep 157.80 60.00 8 $ 20 $ $ Sales 15-Sep 20-Sep 26 2 25 29 29 26 6.09 $ 109.62 4 157.62 4 25 29 Ending Inventory $ 6.00 $ 60.00 $ 6.00 $ 12.00 $ $ 6.00 $ 6.10 $ $ 12.00 122.00 134.00 $ 6.10 $ 24.40 $ $ 6.10 $ 6.05 $ $ $ 24.40 151.25 175.65 175.65 Ending Inventory $ 6.00 $ 60.00 $ $ $ $ $ $ 6.00 $ 6.00 $ 6.10 $ $ 6.00 $ 6.10 $ $ 6.00 $ 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory Dr 60.00 15-Sep Cash (8 x $8.50) Merchandise Sales Revenue Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Recorded the cost of goods sold 48.00 20-Sep Merchandise Inventory (20 x $6.10 ) Cash 122.00 24-Sep Cash (18 x 8.50) Merchandise Sales Revenue Record sale of inventory 153.00 24-Sep Cost of Goods Sold (2 x $6)+(16 x $6.10) Merchandise Inventory Recorded the cost of goods sold 109.60 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory 60.00 12.00 12.00 122.00 134.00 12.00 12.20 24.20 12.00 15-Sep Cash (8 x $8.50) Merchandise Sales Revenue Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Record inventory reduction due to sale 48.00 20-Sep Merchandise Inventory (20 x $6.10) Cash 122.00 $ $ 6.10 $ 6.05 $ $ $ 12.20 151.25 175.45 175.45 Ending Inventory $ 6.00 $60 $ $ $ 6.00 $ 6.00 $ 6.10 $ $ $ $ $ 6.05 $ $ 24-Sep Cash (18 x 8.50) Merchandise Sales Revenue Record sale of inventory 153.00 24-Sep Cost of Goods Sold (18 x $6.10) Merchandise Inventory Record inventory reduction due to sale 109.80 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory 60.00 12.00 12.00 122.00 per unit 134.00 $6.09 24.38 151.25 151.25 $5.22 15-Sep Cash (8 x $8.50) Merchandise Sales Revenue Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Record inventory reduction due to sale 48.00 20-Sep Merchandise Inventory (20 x $6.10) Cash 122.00 24-Sep Cash (18 x 8.50) Merchandise Sales Revenue Record sale of inventory 153.00 24-Sep Cost of Goods Sold (18 x $6.09) Merchandise Inventory Record inventory reduction due to sale 109.62 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 Cr 60.00 68.00 ### 122.00 153.00 109.60 151.25 ### 68.00 ### 122.00 Purchases 9/7: 10 bottles purchased at $6 9/20: 20 bottles purchased at $6.10 9/30: 25 bottles purchased at $6.05 Sales - selling price, $8.50 a bottle 9/15: 8 bottles 9/24: 18 bottles 153.00 109.80 151.25 ### 68.00 ### 122.00 153.00 109.62 151.25 date 1-Jul 3-Jul 31-Jul 31-Aug 30-Sep Cash 15,000.00 10,000.00 date date Notes Payable 10,000 3,000.00 375.00 250.00 200.00 300.00 1,200.00 7-Jul 10-Jul 11-Jul 13-Jul 14-Jul 31-Jul 120.00 45.00 1,500.00 8,500.00 480.00 300.00 5-Aug 10-Aug 15-Aug 20-Aug 20-Aug 22-Aug 3,000.00 420.00 60.00 45.00 1-Sep 5-Sep 7-Sep 10-Sep 5,000.00 1,500.00 456.00 122.00 151.26 13-Sep 15-Sep 20-Sep 20-Sep 30-Sep 10,000 15,000.00 20,000.00 25,000.00 31-Jul 5-Aug 18-Aug 31-Aug 8-Sep 30-Sep Accounts Rec. 5000 3200 1000 7500 4000 6000 26700 date 3-Jul 85,000.00 57,975.74 11-Jul 27,024.26 Misc. expense 250 13-Jul Baking equipment 5,000 5,000 250 1-Jul 15-Aug 11-Sep Baking supplies 8,500 5,000 7,000 20,500 1,100 7-Jul Prepaid rent 1,500 14-Jul 22-Aug 19,400 Adj Misc. supplies 300 300 600 50 31-Jul Prepaid insurance 1,200 1,200 900 1,500 550 adj 300 Accounts payable 10-Aug 20-Aug 10-Sep 13-Sep 1-Jul 30-Jul 5,000 45 15-Aug 31-Aug 7000 13-Sep 45 8,500 31-Jul 15-Aug 31-Aug 15-Sep 30-Sep Salary and wages expense 120 480 420 456 480 45 5,000 13,590 30-Jul 31-Aug 8500 45 20,590 7,000 Telephone expense 45 45 1,956 1-Sep Dividends 3,000 90 3,000 baking supplies expense adj 0 misc supplies expense adj 15-Sep 24-Sep COGS LIF0 48.00 109.60 0 Merchandise Sales Revenue 68.00 153.00 157.60 15-Sep 24-Sep 221.00 15-Sep 24-Sep COGS Weighted Avg. 48.00 109.62 157.62 10-Jul Business License exp 375 375 Common Stock 15,000 5,000 1-Jul 13-Jul 20,000 Insurance expense COMPLETION OF STEPS 1- 4 DELIVERABLE: CONGRATULATIONS! YOU ARE NOW READY TO SUBMIT YOUR WORKBOOK TO COMPLETE THE 3-3 CHECKPOINT REQUIREMENT 0 13-Jul Advertising expense 200 200 7-Jul 15-Aug 15-Sep Rent expense 1,500 1500 1500 4,500 Bakery Sales 15,000 20,000 25,000 60,000 31-Jul 31-Aug 30-Sep 5-Aug 20-Aug 5-Sep 20-Sep Salaries and wages payable 120 120 480 480 420 420 456 456 480 31-Jul 15-Aug 31-Aug 15-Sep 30-Sep 1,956 480 depreciation expense acc dep 0 Interest expense Interest payable 0 adj adj 15-Sep 24-Sep 0 COGS FIFO 48.00 109.80 157.80 0 7-Sep 20-Sep 30-Sep Merch. Inv. FIFO 60.00 48.00 122.00 109.60 151.25 175.65 15-Sep 24-Sep 7-Sep 20-Sep 30-Sep Merch. Inv. LIFO 60.00 48.00 122.00 109.80 151.25 175.45 15-Sep 24-Sep READY TO SUBMIT YOUR POINT REQUIREMENT 7-Sep 20-Sep 30-Sep Merch. Inv. Avg. 60.00 48.00 122.00 109.62 151.25 175.63 15-Sep 24-Sep Peyton Approved Adjusting Journal Entries 2014 Date Accounts 30-Sep Depreciation Expense accumulated depreciation interest expense interest payable baking supplies exp baking supplies Debit 208.33 Credit 208.33 300.00 300.00 19,400.00 19,400.00 misc supplies exp misc supplies 550.00 insurance expense prepaid insurance 300.00 550.00 300.00 Peyton Approved Income Statement For Qtr. Ending 9/30/2014 Revenues Bakery revenue Merchandise sales revenue Total Revenues 60,000 $ Expenses Baking supplies expense Rent expense Salary and wage expense Misc supplies exp Insurance expense Depreciation expense Cost of Goods Sold Interest expense License expense Telephone expense Misc. expense Advertising expense Total Expenses Net Income 221.00 60,221.00 19,400.00 4,500.00 1,956.00 600.00 300.00 208.33 157.80 300.00 375.00 90.00 250.00 200.00 28,337.13 $ 31,883.87 Peyton Approved Statement of Retained Earnings For Qtr. Ending 9/30/2014 Beginning Retained Earnings Plus Net Income Less - dividends Ending Retained Earnings $ 31,883.87 (3,000.00) $ 28,883.87 If the student chooses FIFO Peyton Approved Balance Sheet As of September 30, 2014 Assets Current Assets Cash Baking supplies Misc Supplies Prepaid insurance Prepaid rent Merchandise Inventory Total Current Assets $ Baking equipment Less accumulated depreciation 5,000.00 (208.33) Total Assets 57,975.74 1,100.00 50.00 900.00 1,500.00 175.65 61,701.39 4,791.67 $ 66,493.06 If the student chooses LIFO Peyton Approved Balance Sheet As of September 30, 2014 Assets Current Assets Cash Baking supplies Misc Supplies Prepaid insurance Prepaid rent Merchandise Inventory Total Current Assets Baking equipment Less accumulated depreciation $ 5,000.00 (208.33) 57,975.74 1,100.00 50.00 900.00 1,500.00 175.45 61,701.19 4,791.67 Total Assets $ 66,492.86 If the student chooses Weighted Average Peyton Approved Balance Sheet As of September 30, 2014 Assets Current Assets Cash Baking supplies Misc Supplies Prepaid insurance Prepaid rent Merchandise Inventory Total Current Assets Baking equipment Less accumulated depreciation Total Assets $ 5,000.00 (208.33) 57,975.74 1,100.00 50.00 900.00 1,500.00 175.63 61,701.37 4,791.67 $ 66,493.04 Peyton Approved Balance Sheet As of September 30, 2014 Liabilities and Owners' Equity Current Liabilities Accounts payable Salary and wage payable Interest payable Total Current Liabilities $ Note payable 20,590.00 480.00 300.00 21,370.00 10,000.00 Total Liabilities 31,370.00 Owners' Equity Common stock Retained Earnings Total Equity 20,000.00 28,883.87 48,883.87 Total Liabilities and Owners' Equity $ 80,253.87 $ 20,590.00 480.00 300.00 21,370.00 Peyton Approved Balance Sheet As of September 30, 2014 Liabilities and Owners' Equity Current Liabilities Accounts payable Salary and wage payable Interest payable Total Current Liabilities Note payable Total Liabilities Owners' Equity Common stock 10,000.00 31,370.00 20,000.00 Retained Earnings Total Equity Total Liabilities and Owners' Equity 28,883.87 48,883.87 $ 80,253.87 $ 20,590.00 480.00 300.00 21,370.00 Peyton Approved Balance Sheet As of September 30, 2014 Liabilities and Owners' Equity Current Liabilities Accounts payable Salary and wage payable Interest payable Total Current Liabilities Note payable 10,000.00 Total Liabilities 31,370.00 Owners' Equity Common stock Retained Earnings Total Equity 20,000.00 28,883.87 48,883.87 Total Liabilities and Owners' Equity $ 80,253.87 Peyton Approved Closing Entries 9/30/2014 Date Accounts 30-Sep Bakery revenue Merchandise sales revenue Income summary Debit Credit 60,000.00 221.00 60,221.00 Income summary Baking supplies expense Rent expense Salary and wage expense Misc. supplies expense Insurance expense Depreciation expense Cost of goods sold Interest expense License expense Telephone expense Misc. expense Advertising expense 27,787.13 Income Summary Retained Earnings 32,433.87 19,400.00 4,500.00 1,956.00 50.00 300.00 208.33 157.80 300.00 375.00 90.00 250.00 200.00 32,433.87 Account Cash Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Peyton Approved Trial Balance 2014 Unadjusted trial balance Debit Credit 57,975.74 20,500.00 175.65 1,500.00 1,200.00 Baking Equipment Misc. Supplies Accounts Receivable Notes Payable Accounts Payable Wages Payable Common Stock Dividends Bakery Sales Merchandise Sales Baking Supplies Expense Rent Expense Insurance Expense 5,000.00 600.00 26,700.00 Misc. Expense Business License Expense Advertising Expense Wages Expense Telephone Expense COGS Depreciation Expense Accumulated Depreciation Misc Supplies Expense* Interest Expense* Interest Payable* 250.00 375.00 200.00 1,956.00 90.00 157.80 Adjusting entries Debit Credit 19,400.00 300.00 550.00 Adjusted trial balance Debit Credit 57,975.74 1,100.00 175.65 1,500.00 900.00 5,000.00 50.00 26,700.00 10,000.00 20,590.00 480.00 20,000.00 10,000.00 20,590.00 480.00 20,000.00 3,000.00 3,000.00 60,000.00 221.00 60,000.00 221.00 19,400.00 300.00 19,400.00 4,500.00 300.00 208.33 250.00 375.00 200.00 1,956.00 90.00 157.80 208.33 4,500.00 208.33 550.00 300.00 111,291.00 20,758.33 CONGRATULATIONS! YOU ARE NOW READY TO SUBMIT YOUR WORKBOOK TO COMPLETE THE 4-3 CHECKPOINT REQUIREMENT 208.33 550.00 300.00 300.00 124,180.19 COMPLETION OF STEPS 5-7 DELIVERABLE: 20,758.33 *These accounts will not be utilized before the adjusting process. They should have zero balance in the unadjusted trial balance. 300.00 124,688.52 111,799.33 Peyton Approved Post Closing Trial Balance 9/30/2014 Account Cash Accounts Receivable Baking Equipment Common Stock Notes Payable Business License Prepaid Insurance Accounts Payable Dividends Merchandise Inventory Accumulated Depreciation Interest payable Retained earnings Wages Payable Baking Supplies Misc. Supplies Debit 57,975.74 26,700.00 5,000.00 375.00 900.00 175.65 1,100.00 50.00 92,276.39 Credit 20,000.00 10,000.00 20,590.00 3,000.00 208.33 300.00 28,883.87 480.00 83,462.20 Peyton Approved Reversing Entries 9/30/2014 Date Accounts Debit Credit COMPLETION OF STEPS 8-11 DELIVERABLE: CONGRATULATIONS! YOU ARE NOW READY TO SUBMIT YOUR COMPLETED WORKBOOK (STEPS 1 - 11)TO COMPLETE THE 6-2 CHECKPOINT REQUIREMENT Running head: ACC 201 FINAL PROJECT PART II BANK MEMO 1 DELETE EVERYTHING THAT APPEARS IN RED Review the Final Project Part II Guidelines and Rubric document to see how your paper will be scored. Be sure to use the information from your accounting cycle workbook to support your answers. Be sure to follow APA format when providing references. If you have questions on APA formatting, you can check the Purdue OWL website or seek help from the SNHU Writing Lab. Notes on APA in a Formal Assignment Use one-inch margins on all sides. Use 12-point Times New Roman font with double spacing. Paragraphs should be at least three to four sentences in length. Do not include the headings \"Introduction\" and \"Conclusion.\" These are included below to help you lay out your paper. APA format assumes that the introduction begins the paper, the body continues the paper, and the conclusion wraps up the paper, so those headings are not needed. Indent the first line of every paragraph by 0.5\". Be careful not to use personal pronouns such as \"I.\" Be sure to replace all of the text in red with your own writing. (This entire first page can be deleted after you review the guidelines. Your paper should begin with the title page that follows.) ACC 201 Final Project Part II Bank Memo Your Name Southern New Hampshire University ACC 201 Final Project Part II Bank Memo 2 REMEMBER: DELETE EVERYTHING THAT APPEARS IN RED Memo Heading (delete this heading in your final paper) To: From: Date: Subject: Introduction (delete this heading in your final paper) In your opening paragraph, very briefly introduce the purpose of your memo. Prior to stating this purpose, state the name of the company, its primary business purpose, and some other general or demographic information about the business. Lastly, inform the reader of the purpose of your memo, which is to request a loan for business expansion. Three or four sentences are sufficient. Overview of the Company's Accounting System (Keep this heading in your final paper) Using content from your accounting cycle workbook and your accounting cycle report, submitted in Final Project Part I, provide an overview of the company's accounting system. What basis of accounting is used? Why? How does it support responsible practices within the company? Accounting Process and Internal Controls for Cash (Keep this heading in your final paper) Using content from your accounting cycle report, submitted in Final Project Part I, what strategies is the business using to ensure responsible accounting practices? Why have these strategies been selected? Describe the overall accounting process. For example, when are entries made, how often are statements produced and reviewed, and why? Describe the internal controls for cash that are in place. Results of Operations and Strengths and Weaknesses of the Company (Keep this heading in your final paper) Using content from your accounting cycle workbook, submitted in Final Project Part I, analyze the results of operations. What do these results tell a business? What is the company doing well and what changes might be needed? What do the financial statements say about the ACC 201 Final Project Part II Bank Memo 3 strengths and weaknesses of the company's financial position? Be sure to discuss the role of ratio analysis. Analysis and Opportunities (Keep this heading in your final paper) Overall, is the company going in the right direction? Why or why not? What opportunities can the company explore given its strengths and weaknesses? How would these be beneficial? Support your analysis with information from your accounting cycle workbook. Conclusion (delete this heading in your final paper) The conclusion reminds the reader what your memo is about and allows you to make a final point without introducing new information. You may request a meeting with your reader in this paragraph. Three or four sentences are sufficient. Use a sign-off greeting such as \"Sincerely\" or \"Cordially.\" ACC 201 Final Project Part II Bank Memo 4 References Nobles, T. L., Mattison, B. L., Matsumura, E. M. (2014). Horngren's financial and managerial accounting (4th ed.). Upper Saddle River, NJ: Pearson Education, Inc. Make sure that you provide appropriate citations in APA style. The textbook is provided as an example and should be kept in the references for your paper. Feel free to add other resources. To add credibility to your paper, remember to cite ALL of the sources within the body of the paper as well as in the References list at the end. References should be in alphabetical order by the author's last name. ACCOUNTING CYCLE 1 ACC 201 Final Project Part I Accounting Cycle Report Adam Cain Southern New Hampshire University ACCOUNTING CYCLE 2 Accounting cycle is the process which entails some steps such as identifying, collecting and evaluating documents as well as transactions, accounting for transactions in journals, and then posting the journalized amounts to the accounts within the general and the subsidiary ledgers. Then, followed by preparing an unadjusted trial balance, possibly preparing a worksheet, analyzing and adjusting entries, preparing adjusted trial balances, and then preparing the financial statements, recording as well as posting last entries, preparing a post-closing trial balance and then followed by recording the reversing entries (Nobles, Mattison, & Matsumura, 2014). In this work various steps, the role of each step and the impacts of omitting steps on the success of a business will be discussed. The paper will also identify the major financial statements obtained from the accounting cycle. Accounting cycle entails a set of steps which are repeated within the same order each period. The cycle always begins with a business event; here the bookkeepers evaluate the transaction and then record that transaction within the general journal with a journal entry. Then, the debits as well as credits from the journals are posted to the general ledger where a trial balance that has not been adjusted is prepared. Therefore, after the accountants and management have completed to analyze the balances on the unadjusted trial balance, at this stage they may decide to make some end of period adjustments such as depreciation expense and the expense accruals ("Journal of Financial Reporting & Accounting", 2010). Thereafter, the adjusted journal entries are posted to the trial balance turning it into the adjusted trial balance. After all of the end year adjustments and the adjusted trial balance are in line with the subsidiary accounts, the financial statements may be prepared. Then after the financial statements are published and presented to the public, the firm may sum up its books for that period. Here, the closing entries ACCOUNTING CYCLE 3 are made and then posted to the post-closing trial balance. Apparently, at the beginning of the subsequent accounting period, reversing journal entries are often made in order to omit or remove the accrual entries that were made in the previous period. Hence, after posting the reversing entries, the accounting cycle will start again with the onset of the new business transaction ("Journal of Financial Reporting & Accounting", 2010). All of the business decisions made in the company depend on the data and numbers. Therefore, if the company decides to omit some steps within its accounting cycle, then it will make decisions that are not accurate and this may fail the firm. Skipping some steps may result in unlawful practices, and the company may face some fines as sanctions by the financial oversight committees. It leads to inaccurate financial statements as well as possible for unlawful accounting activities under the generally accepted principles or the international accounting standards (Durocher & Fortin, 2011). For instance, avoiding creating journal entries will the company not to accurately account for its capital and this may lead to business losses. Also failure to create the worksheet will mean that the company will not be able to track any adjusting journal entries required to make the company's financial statements in agreement with each other. Avoiding adjusting journal entries will make the company's financial statements not to be in balance with each other. The company may therefore consider employing professionals to handle the accounting process of its business dealings. There are some financial statements that are realized from the accounting cycle or process which include income statements, balance sheets, statement of the cash flows, and the statement of retained earnings. But the major financial statements that are recognized by the management team are the income statement and balance sheet. The income statement presents the expenses, profits or losses, and revenues generated in the course of the reporting period. It is ACCOUNTING CYCLE 4 regarded as the most significant as it presents the operational outcomes of an entity. The balance sheet presents the liabilities, assets as well as equity of an entity at a certain reporting date. It is therefore regarded as the second most important after the income statement as it offers information regarding the capitalization and liquidity of the company (Durocher & Fortin, 2011). The balance sheet and income statements are the most visible according to management teams due to their ease of preparations. In conclusion, the accounting cycle is therefore considered a step by step process. The accounting process begins with the recording of various business transactions which later result in the preparation of some financial statements. The cycle demonstrates the sole reason of the financial accounting to develop effective financial information in form of the general-purpose financial statements. Some of the major financial statements identified are income statements and balance sheets. ACCOUNTING CYCLE 5 References Nobles, T. L., Mattison, B. L., Matsumura, E. M. (2014). Horngren's financial and managerial accounting (4th ed.). Upper Saddle River, NJ: Pearson Education, Inc. Journal of Financial Reporting & Accounting. (2010). Managerial Auditing Journal, 25(4). ttp://dx.doi.org/10.1108/maj.2010.05125daa.001 Durocher, S. & Fortin, A. (2011). Practitioners' participation in the accounting standard-setting process. Accounting And Business Research, 41(1), 29-50. http://dx.doi.org/10.1080/00014788.2011.549635