REVIEW OF THE ACCOUNTING CYCLE
The Accounting Process (or accounting cycle) consists of 2 interrelated parts, namely: Recording Phase - concerned w/ collecting information about economic transactions and events and distilling that information into a form useful to accounting process. Reporting Phase - the recorded information is organized and summarized using various formats for a variety of decision-making purposes. STEPS IN THE ACCOUNTING PROCESS RECORDING PHASE (during the accounting period) Step 1 - Step 3 Step 1 - Business documents analyzed Analysis of documentation provides basis for making an initial record of each transaction or other economic events. Economic events that have consequences to the business entity: Transactions - are transfers or exchanges of something w/ value between the firm and 1 or more independent outside parties. Other Economic Events: Internal Events - events that occur within and have economic consequences for the firm. Example: use of the inventor...