How is accounting a process

Accounting process

1Collecting and analyzing accounting documents It is a very important step where you review and analyze the source documents. For example cash, bank, sales and purchase related documents. This is a continuous process throughout the period.2Posting in journalOn the basis of the above documents, you pass journal entries with double-entry bookkeeping, in which the debit and credit balance remains the same. This process is repeated throughout the period.3Posting in general ledger accounts Debit and credit of all of the above accounts are affected via journal entries, posted in general ledger accounts. A ledger is simply a collection of all accounts. Usually this is also a continuous process for the entire accounting period.4Preparation of the trial balance As the name suggests, raw balance is a summary of all the balances of the general ledger accounts, regardless of whether they have debit or credit. Since we follow double-entry bookkeeping account system, the sum of all debit and credit balances in the account balance remains the same. Usually you have to prepare the account balance at the end of the said accounting period.5Posting of correction postingsIn this step the adjustment entries are first passed through the journal, followed by publication in book accounts, and finally in the balance sheet. Since in most cases we have accruals to find the correct value of income, expenses, assets and liabilities accounts, we need to do these adjusting entries. This procedure is carried out at the end of each billing cycle.6Adjusted raw balance Taking into account the adjustment postings mentioned above, we create the adjusted account balance. The adjusted account balance is a platform to prepare the financial statements of a company.7Preparation of the degreeAn annual financial statement is the set of statements such as income and expenditure account or trade and income statement, cash flow statement, fund flow statement, balance sheet or income statement. With the help of the balance sheet, we put all the information in the annual accounts. A financial statement clearly shows a company's financial health by showing its gains or losses.8Post-closing entriesThe various accounts of the company's income and expenses are transferred to trading and profit & amp; Loss account. With the result of these entries, the balance of all the income and expenditure accounts come to NIL. The balance of these entries represents the profit or loss of the company, which is eventually passed to the equity or capital of the owners.9Post-final rough balance post closing raw balance represents equals the balance of asset, liabilities & amp; Asset transfers. These balances will be used as the opening balance for the next financial year.