LU5 + LU6 - LU6: Adjustments and the accounting cycle - page 22-23 (Realization and Matching principles), , pages 133-135 (excluding “Tower Restaurant”) and pages 139-151 (from “Computerized Posting”) Review Exhibit A-5, page

4 important questions on LU5 + LU6 - LU6: Adjustments and the accounting cycle - page 22-23 (Realization and Matching principles), , pages 133-135 (excluding “Tower Restaurant”) and pages 139-151 (from “Computerized Posting”) Review Exhibit A-5, page

Know the Accounting Cycle. What is the right order?

  1. Business transaction
  2. Analyze transactions
  3. Post transactions
  4. Trial balance
  5. Prepare Adjustments
  6. Journalize adjustments
  7. Post Adjusting entries
  8. (Post-adjustment Trial balance)
  9. Financial statements
  10. if EOY: Closing entries
  11. Post-closing trail balance


Starts again...

Accrual Basis Accounting

  • Recording transactions when revenue is earned and expenses are incurred
  • Used by most businesses
  • GAAP complaint

What is the process of Posting?

Posting is the process whereby General Ledger is updated with the total of the special journals. All column totals and sundry items are posted.
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Trail balance, what is it and what is the order?

  • The Debit side of General Ledger should be equal to the Credit side
  • Lists all accounts with their new account balance
  • Order:
    • Asset
    • Liabilities
    • Owner's Equity
    • Revenue/ Income
    • Expenses

The question on the page originate from the summary of the following study material:

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