Financial Statement Accuracy

Tutor: None Selected Time limit: 1 Day

Identify the key steps in the closing process that provide the most opportunity to make mistakes in processing account transactions. Make at least two (2) recommendations for improving the accuracy and reliability of the information in the gaps.

May 1st, 2015

Transferring information from temporary accounts to permanent accounts are referred to as closing accounting process or closing books.
After recording financial transaction all accounting staff needs to close down financial process for the month to prepare monthly accounts. Every business uses temporary accounts, revenues and expense accounts which allows the company or business to record all activities carried in those month.
The purpose of closing process is to close out those accounts and get the balances, allowing them to start with a zero balance in the next month. Generally it consists of four steps:-
1-closing revenues
2-closing expenses
3-closing income summary
4-closing dividends

For accuracy and reliability of information we should follow the detailed 10 steps of accounting cycle:-

1-Collect source document
2-Analyze transaction
3-Journalize transactions
4-Post transactions in the ledger
5-Prepare un adjusted trial balance
6-Prepare adjusting entries
7-Prepare trial balance
8-Prepare financial statements
9-Journalize post closing entries
10-Re-draft financial statements

May 1st, 2015

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