Service Company Accounting Cycle: Definition and Stages
Service Company Accounting Cycle: Definition and Stages – What is the service company's accounting cycle like? On this occasion About the knowledge.co.id will discuss the stages of the cycle and its meaning. Let's look at the discussion together in the article below to better understand it.
Service Company Accounting Cycle: Definition and Stages
The service company accounting cycle is a process of making company financial statements in a certain period. In general, the accounting cycle starts from the transaction to the preparation of the company's financial statements then proceed with the existence of a closed balance with a closing entry (closing journal) or arriving at the journal reverse.
Stages of the Service Company Accounting Cycle
Service Company Accounting Cycle – The Accounting Cycle is a process that shows the steps required for manual accounting completion. Examples of the accounting cycle of service and trade companies and services are in principle the same, the difference is only in the type of transaction.
Transaction Analysis
Transactions that occur in the company will certainly be recorded in source documents or proof of transactions. Examples of source documents that we often encounter include receipts, sales invoices, purchase invoices, cash receipts, work hours cards and others.
Journal Making
Journalizing activity is writing the type of account along with the amount from the evidence of the transaction. From collecting evidence of the transaction, it is then recorded in a daily journal or what can be called a general journal.
Ledger Posts
General ledger posting activity is transferring account information and its balance into special columns of similar accounts.
Trial Balance / Trial Balance
The next accounting activity is the preparation of a trial balance. The trial balance / trial balance aims to assess the process of inputting data from the general journal to the ledger (posting) is correct by making a trial balance. If the number of debits and credits is balanced, it means that there are no errors in inputting data.
Adjusting journal entry
The next stage is the preparation of adjusting journals. Adjusting journals are made when transactions occur that affect company accounts, for example depreciation of equipment, unpaid rent and so on, and will usually bring up accounts that are new.
Work sheet
The work sheet preparation refers to the previous stage, namely the trial balance and adjusting entries. The work sheet will contain information about the trial balance and adjusting entries which will produce the information needed to prepare financial reports later. Such information includes income statements and balance sheets.
Financial statements
Financial statements are the stage of the service company accounting cycle, which include income statements, balance sheets and reports on changes in capital.
Closing Journal
in the end, the estimated accounts on the statement of changes in capital and profit and loss statements that exist in service companies that will be closed. These accounts include revenue, expense/expense, profit and loss and privacy accounts. Learn more about closing entries. Each closed estimating account will have a balance of Rp.0.00 so that only the estimating account that affects the balance sheet will have a balance remaining.
Reverse Journal
the reverse journal stage is the stage of reversing several accounts that have been closed to restore their balances. Reversed account accounts are usually prepaid payments that are not yet due. Learn more about reversing journals.
Final / Beginning Balance (After Closing)
It is called the ending/beginning balance because as the final balance is produced at the end of the period, It is called the initial balance sheet because it will be used as the initial balance sheet in the accounting cycle of the period next.
Thus the review from About the knowledge.co.id about Service Company Accounting Cycle, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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