The Accounting Cycle

This book is the first of seven books which introduces the basic principles of accounting. It introduces accounting, the fundamental accounting equation, and four core financial statements. Students will learn the basics of accounting, such as debits and credits, the journal, and trial balance, income measurement, revenue and expense recognition, and the reporting cycle. With a foundation in these basics of accounting readers are introduced to financial statement preparation, the accounting cycle, closing entries, classified balance sheets, the importance of business liquidity, and the concept of the operating cycle. Part 1: Welcome to the World of Accounting 1. Accounting Information 1.1 Accounting Defined 1.2 Financial Accounting 1.3 Managerial Accounting 1.4 A Quality Information System 1.5 Inherent Limitations 2. The Accounting Profession and Careers 2.1 Accounting and Professional Ethics 3. The Fundamental Accounting Equation 3.1 Assets 3.2 Liabilities 3.3 Owners’ Equity 3.4 Balance Sheet 4. How Transactions Impact the Accounting Equation 4.1 Edelweiss Collects an Account Receivable 4.2 Edelweiss Buys Equipment With Loan Proceeds 4.3 Edelweiss Provides Services to a Costumer on Account 4.4 Edelweiss Pays Expenses With Cash 4.5 Generalizing About the Impact of Transactions 4.6 Distinguishing Between Revenue and Income 5. The Core Financial Statements 5.1 Financial Statements 5.2 Income Statements 5.3 The Statement of Retained Earnings 5.4 Balance Sheet 5.5 Statement of Cash Flows 5.6 Articulation 5.7 Unlocking the Mystery of Articulation Part 2: Information Processing 6. Accounts, Debits and Credits 6.1 Accounts 6.2 Debits and Credits 6.3 The Fallacy of “+/-” Nomenclature 6.4 The Debit/Credit Rules 6.5 Assets/Expenses/Dividends 6.6 Liabilities/Revenues/Equity 6.7 Analysis of Transactions and Events 6.8 Determining an Account’s Balance 6.9 A Common Misunderstanding About Credits 7. The Journal 7.1 Illustrating the Accounting Journal 7.2 Special Journals 7.3 Page Numbering 7.4 But, What are the Account Balances? 8. The General Ledger 8.1 Posting 8.2 To Review 9. The Trial Balance 9.1 Debits Equal Credits 9.2 Financial Statements From the Trial Balance 10. Computerized Processing Systems 10.1 What do they Look Like 11. T-accounts 11.1 Comprehensive T-accounting Illustration 11.2 Chart of Accounts 11.3 Control and Subsidiary Accounts Part 3: Income Measurement 12. "Measurement Triggering” Transactions and Events 12.1 The Meaning of “Accounting” Income 12.2 More Income Terminology 12.3 An Emphesis on Transactions and Events 13. The Periodicity Assumption 13.1 Accounting Implications 14. Basic Elements of Revenue Recognition 14.1 Payment and Revenue Recognition 15. Basic Elements of Expense Recognition 15.1 Payment and Expense Recognition 16. The Adjusting Process and Related Entries 16.1 Illustration of Prepaid Insurance 16.2 Illustration of Prepaid Rent 16.3 I’m a Bit Confused – Exactly When do I Adjust? 16.4 Illustration of Supplies 16.5 Depreciation 16.6 Unearned Revenues 16.7 Accruals 16.8 Accrued Salaries 16.9 Accrued Interest 16.10 Accrued Rent 16.11 Accrued Revenue 16.12 Recap of Adjustments 16.13 The Adjusted Trial Balance 16.14 Alternative Procedures for Certain Adjustments 17. Accrual- Versus Cash-Basis Accounting 17.1 Modified Approaches 17.2 Illustration of Cash-Versus Accrual Basis Accounting Part 4: The Reporting Cycle 18. Preparing Financial Statements 18.1 An Illustration 18.2 Considering the Actual Process for Adjustments 18.3 Financial Statements 18.4 Computerization 18.5 A Worksheet Approach 18.6 An Additional Illustration 19. The Accounting Cycle and Closing Process 19.1 The Closing Process 19.2 Post Closing Trial Balance 19.3 Revisiting Computerization 20. Reversing Entries 21. Classified Balance Sheets 21.1 Assets 21.2 Liabilities 21.3 Equity 21.4 Other Entity Forms 21.5 Notes to the Financial Statements 22. Business Liquidity and the Operating Cycle 22.1 Working Capital 22.2 Current Ratio 22.3 Quick Ratio Sisältö Part 1: Welcome to the World of Accounting Accounting Information Accounting Defined Financial Accounting Managerial Accounting A Quality Information System Inherent Limitations The Accounting Profession and Careers Accounting and Professional Ethics The Fundamental Accounting Equation Assets Liabilities Owners’ Equity Balance Sheet How Transactions Impact the Accounting Equation Edelweiss Collects an Account Receivable Edelweiss Buys Equipment With Loan Proceeds Edelweiss Provides Services to a Costumer on Account Edelweiss Pays Expenses With Cash Generalizing About the Impact of Transactions Distinguishing Between Revenue and Income The Core Financial Statements Financial Statements Income Statements The Statement of Retained Earnings Balance Sheet Statement of Cash Flows Articulation Unlocking the Mystery of Articulation Part 2: Information Processing Accounts, Debits and Credits Accounts Debits and Credits The Fallacy of “+/-” Nomenclature The Debit/Credit Rules Assets/Expenses/Dividends Liabilities/Revenues/Equity Analysis of Transactions and Events Determining an Account’s Balance A Common Misunderstanding About Credits The Journal Illustrating the Accounting Journal Special Journals Page Numbering But, What are the Account Balances? The General Ledger Posting To Review The Trial Balance Debits Equal Credits Financial Statements From the Trial Balance Computerized Processing Systems What do they Look Like T-accounts Comprehensive T-accounting Illustration Chart of Accounts Control and Subsidiary Accounts Part 3: Income Measurement "Measurement Triggering” Transactions and Events The Meaning of “Accounting” Income More Income Terminology An Emphesis on Transactions and Events The Periodicity Assumption Accounting Implications Basic Elements of Revenue Recognition Payment and Revenue Recognition Basic Elements of Expense Recognition Payment and Expense Recognition The Adjusting Process and Related Entries Illustration of Prepaid Insurance Illustration of Prepaid Rent I’m a Bit Confused – Exactly When do I Adjust? Illustration of Supplies Depreciation Unearned Revenues Accruals Accrued Salaries Accrued Interest Accrued Rent Accrued Revenue Recap of Adjustments The Adjusted Trial Balance Alternative Procedures for Certain Adjustments Accrual- Versus Cash-Basis Accounting Modified Approaches Illustration of Cash-Versus Accrual Basis Accounting Part 4: The Reporting Cycle Preparing Financial Statements An Illustration Considering the Actual Process for Adjustments Financial Statements Computerization A Worksheet Approach An Additional Illustration The Accounting Cycle and Closing Process The Closing Process Post Closing Trial Balance Revisiting Computerization Reversing Entries Classified Balance Sheets Assets Liabilities Equity Other Entity Forms Notes to the Financial Statements Business Liquidity and the Operating Cycle Working Capital Current Ratio Quick Ratio This book is the first of seven books which introduces the basic principles of accounting. It introduces accounting, the fundamental accounting equation, and four core financial statements. Students will learn the basics of accounting, such as debits and credits, the journal, and trial balance, income measurement, revenue and expense recognition, and the reporting cycle. You can download the book for free via the link below.