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Why Would Different Companies Have Different Accounting Cycles?

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Why would different companies have different accounting cycles?

Different companies are going to have different accounting cycles because even though there are some similarities, there also some differences in activities that each company performs. A manufacturing company purchases raw material in order to manufacture their supply inventory and then sells it to a retail company. A retail company purchase supply inventory from the manufacturing company and then sells it. For example, Apple Inc. is a company that manufactures electronic inventory items and then sells it to a retail store, such as Best Buy.

Would you expect the steps of the accounting cycle to be the same for each company? Why, or why not?

The steps of the accounting cycle will be similar, but not …show more content…

The purpose of bank reconciliation is to compare the balance on the bank statement with the accounting records. Bank reconciliation is the “process needed to identify errors, irregularities, and adjustments needed to the Cash account.” (K Wainwright, S. 2012).

What are the reasons for differences between the cash reported in the accounting records, and the cash balance in the bank statements?

Some of the reasons for differences between the cash reported in the accounting records and the cash balance in the bank statement are:

1. “Deposits in transit are receipts entered on company records but not pro¬cessed by the bank, and (2) outstanding checks are written checks that have not cleared the bank.”(K Wainwright, S. 2012). These are transactions that reflect on the accounting records but not on the bank statement.
2. “NSF (nonsufficient funds) checks are checks previously deposited but have been returned for nonpayment, (2) bank service charges and fees, (3) inter¬est earnings on the bank account(s), and (4) cash collections of notes and drafts.” (K Wainwright, S. 2012). These items might reflect on the bank statement, but not in the accounting

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