2.2 Accounting cycle

Question 1

Identify and record

Answer 1

Source documents are used to record transactions in the journal and posted to the ledger daily.

Accounting information system
- Source documents
- Ledger
- Journal

Question 2

Adjust

Answer 2

The ending balances of ledger accounts are listed in a trial balance and adjusted at least once in a financial year.

Accounting information system
- Trial balance

Question 3

Report

Answer 3

The adjusted trial balance is used to prepare the financial statements at least once in a financial year

Accounting information system
- Financial statement
~ performance
~position

Question 4

Close

Answer 4

After the financial statements are finalised, income, expense, income summary, drawings and dividends accounts are close at the end of the financial year.