THE ACCOUNTING

CYCLE
(Part I)
LESSON 10
 LEARNING OBJECTIVES:
 know the complete accounting cycle or accounting
process and discuss the first part of the accounting
cycle (Transaction Analysis to Preparation of Trial Balance);
define trial balance;
 illustrate the format of a trial balance;
 know the steps in preparing trial balance;
 prepare a trial balance (unadjusted); and
 participate actively in class discussion and activities.
Let’s Review!
• Enumerate the two (2) Books of Accounts we have
discussed.
• What is a General Journal?
• Discuss the steps in journalizing.
• What is a General Ledger?
• Discuss the steps in in posting journal entries to the
ledger.
Can you define CYCLE?...

CYCLE
A set of events or actions that happen again
and again in the same order.
-Meriam Websters Dictionary-
Today’s Topic is about …

THE ACCOUNTING CYCLE

(Part I)
LESSON 10
 ACTIVITY no. 1:
INSTRUCTIONS:
 Form two (2) groups.
 Each group will be given a metastrips with steps in accounting
process written.
Each group will arrange the steps correctly and post the
metastrips on the manila paper; put an arrow to show the cycle.
Perform the activity in five (5) minutes.
The group with the correct answer will be the winner and will
receive a prize.
THE ACCOUNTING CYCLE

Part I
 STEPS IN ACCOUNTING PROCESS:
1.) ANALYSIS OF BUSINESS TRANSACTIONS
 Identification and measurement of activities (external and internal) transactions of the business that affect the
financial position of the business. At this stage, the documents used by the business are analyzed whether it has
financial impact or effect. Recall the rule that only financial transactions are recorded and that the amount can be
measured. As defined, financial transactions are those activities that change the value of an asset, liability or
an equity.
Examples of financial transactions:
1.) External Transactions
Sale of goods or services
Purchase of goods and services
Borrowing cash from banks and other financial institutions
2.) Internal Transactions
Recording of inventory losses
Depreciation of assets
Amortization of prepaid expenses
 STEPS IN ACCOUNTING PROCESS:
1.) ANALYSIS OF BUSINESS TRANSACTIONS

Examples of non-financial transactions:

hiring and termination of employees
recognition from the government as most outstanding business
death of owner
 STEPS IN ACCOUNTING PROCESS:
2.) MAKE JOURNAL ENTRIES
 Transactions and events are entered into the accounting
records. These are called the books of original entry which
is the GENERAL JOURNAL.

3.) POST TO LEDGER

All transactions being recorded in the journals will now be
transferred to the general ledger to summarize the accounts,
per account type. These are called the books of final entry
which is the GENERAL LEDGER.
 STEPS IN ACCOUNTING PROCESS:
4.) PREPARE TRIAL BALANCE (Unadjusted TB)
At the end of an accounting period (for example, one month or one
year) the working trial balance is prepared. This involves copying
each account name and account balance to a worksheet (working
trial balance). The resulting first two columns of the worksheet are called
the unadjusted trial balance.
What is a TRIAL BALANCE?...

TRIAL BALANCE
Is the list of all accounts with their balances
that are lifted from the general ledger.
 It is prepared to prove the equality of debits
and credits.
 FORMAT of a TRIAL BALANCE?...
2.) ACCOUNT TITLE 1.) TITLE:
Name of the Company, Type
of Document (Unadjusted Trial
Balance), Date

3.) DEBIT AMOUNT 6.) TOTAL debit & 5.) CREDIT AMOUNT
credit AMOUNT
STEPS IN PREPARING TRIAL BALANCE:
 ACTIVITY no. 2:

Using the General Ledger of ARENAS

CLEANING SERVICES provided,
Prepare the Trial Balance.
 GENERALIZATION:
 What have you learned from our topic today?

 Each group, can you now arrange the steps in accounting process correctly?

 Define Trial Balance.

 What is the importance of preparing Trial Balance?

 On the board, please illustrate the format of a trial balance.

 Discuss in front of the class, the steps in preparing trial balance.

Short QUIZ:
Directions: Arrange the following in order. Write the letter of the correct answer.

(1-9)- Accounting Cycle/Process

A. Make journal entries
B. Close accounts
C. Prepare post-closing trial balance
D. Analyze business transactions or source documents
E. Prepare trial balance (unadjusted trial balance)
F. Make adjusting entries
G. Post to ledger accounts
H. Prepare financial statements.
I. Prepare adjusted Trial Balance
Short QUIZ:
Directions: Arrange the following in order. Write the letter of the correct answer.

(10-12)- Steps in preparing Trial Balance

A. Add each column (debit & credit)
B. List each account from the general ledger that has a balance
C. Compare the column totals

(13-15)- Define Trial Balance-3pts.

 assignment:

Prepare Trial Balance of the R. VISPERAS COMPUTER SHOP.

(Reference: Fundamentals of ABM 1 (Author- Dr. Marife

Agustin-Acierto & Benjamin A. Abarquez Jr) pages 154-157