ACC 201 Final Project Part I Accounting Cycle Report Natasha Martin-Moore Southern New Hampshire University A respective organization is financially governed by accounting procedures outlined by their accounting department. Each step in this defined accounting cycle plays and crucial part in not only managing the business’ finances every time revenue is earned or a purchase is made but also in helping to create accurate entries to track the progress of the business from a financial standpoint. Understanding the accounting cycle implemented by an accounting organization is just as important as following the identified steps in the correct order. An accounting cycle runs within the organizations accounting period and is used to report …show more content…
The financial information captured during each step of the accounting plays a part in how the business will proceed for the next accounting period. If an organization were to omit a step in the cycle, it would start to make business decisions based on inaccurate financial information which would result in a failure to the organization. If a step is missed, any step within the cycle, this jeopardizes the previous step which results in the closing of the business books inaccurately. Another disadvantage to missing a step in the process is the possibility of the company facing fines and sanctions from regulators that have financial oversight on business transactions. The dependence each step has with the step before it ultimately create the chain of activities thar formulate the …show more content…
Financial statements are company records that document the activities of the business from a financial perspective. Financial statements provide a holistic view of the financial conditions and overall profitability of that business. The balance sheet provided a high level snapshot of the organizations financial status at a specific time. The balance sheet differs from the remaining statements because it is the only statement that highlights a single point in time. The income statement speaks to the profits and losses that occur within the organization from an operational perspective. The income statement is also known as the profit and loss (P&L) statement. The statement of retained earning displays the fluctuation that occurs in the owners’ equity in the business. The statement of retained earning highlight the equity positions at the beginning and ends of a specific reporting period. The cash flow statement reports on the business cash flow. The cash flow statement shows how the money flows in and out of the company. The cash flow statement reveals the viability of the organizations position from the cash side of the business while explaining how the cash position change