Module 11 ICT 141

ICT 141: Principles of Accounting First Semester 2021 -2022
Course Title: Principles of Accounting
I. Module 11: Accounting Cycle

Estimated Time: 3 hours (Week 16)
1) Determine the steps in the accounting cycle.
II. Module Introduction/Rationale:

This module introduces you to the steps in the accounting cycle.
III. Module Outcomes:

At the end of the topic the students must have:
IV. Lesson One: Accounting Cycle
V. Lesson Outcomes:
Engage
Do you have an idea about the steps in the accounting cycle? If yes, can you share your idea? Go to
www.menti.com and use the designated code.
Explore
Click the link https://www.youtube.com/watch?v=0HBPIeFdjfg and
https://www.youtube.com/watch?v=eUQTeo7bfeI
Explain
ACCOUNTING CYCLE
The collective process of recording, processing, classifying and summarizing the business
transactions in financial statements is known as accounting cycle.
Steps in Accounting Cycle

1. Identify Transactions
The accounting process begins with identifying economic events that impact the financial
position of the business. The economic events are the ones that can be measured in monetary
terms and relate with the business organization.
2. Record Transactions in Journal
Once the authenticity of the source document is ascertained, the next step is to record
the accounting information in the book of original entry called the journal. Transactions in journal
are recorded in the order in which they occur. The whole exercise of recording transactions in
journal is referred to as journalizing.
3. Post Journal to Ledger
The second stage in the accounting cycle is posting entries from journal to the ledger
account. Posting involves the practice of transferring journal entries from the journal to the ledger.
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4. Prepare Trial Balance

The closing debit or credit balances in various ledger accounts then go into the Trial
Balance of the business for a particular year. After all the balances are brought down in Trial
Balance, each side of the trial balance is added. If both the sides tally, it means that the accounts
were prepared with accuracy. However, where both sides do not tally with each other, it means
that the error is committed. Thus, in such a situation one needs to make adjustments to the trial
balance to correct such errors.
5. Record Adjusting Entries
The next step in the accounting cycle is to record adjusting entries. Adjusting entries are
the journal entries that are made at the end of the accounting period. This is done in order to
correct the errors committed in preparing accounts before preparing the financial statements.
Each of these entries adjust incomes or expenses in order to match them with the revenues and
expenses of the current period.
6. Prepare Adjusted Trial Balance
Adjusted Trial Balance is the one that records all the company accounts after the
adjusting journal entries have been made at the end of the accounting period. This is the last step
before preparing financial statements of the company. Therefore, all the accounts appearing in
the adjusted trial balance will appear on the financial statements.
7. Prepare Financial Statements
Financial statements are the basic and formal annual reports. Through these
fundamental accounting statements, the corporate management communicates financial
information to all of its stakeholders. Financial statements include:
• Income Statement
• Balance Sheet
• Statement of Owner’s Equity
• Statement of Cash Flows
• Notes to Financial Statements
8. Closing Entries
Closing entries are the journal entries that are made at the end of the accounting period
to close temporary accounts and then transfer their balances to permanent accounts. Temporary
accounts include income and expense accounts. Whereas, permanent accounts include all
assets, liabilities and capital accounts. Thus, temporary accounts are closed at the end of every
accounting period so that the beginning of the next accounting period have zero balance to start
with. This concept is in accordance with the matching principle of accounting.
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Elaborate
As a student, what cycle do you follow in your life?
Evaluate
Worksheet No.
Name: ____________________________________________________________
Course, Year and Section:_______________________________ Date: __________
Answer as directed. Write your answer on the space provided.
References:
• Rabot, Bernabe Donato Jr. and Malco, Ma. Theresa De Francesca. Accounting Skills and
Bookkeeping Principles Workbook for K-12 Senior High School. (2019) Great Books Trading.
• Reyes, Virgilio D. The Fundamentals In Accounting 2018th Edition (2018). GIC Enterprises Co,
Inc
Online References:
https://www.youtube.com/watch?v=0HBPIeFdjfg
https://www.youtube.com/watch?v=eUQTeo7bfeI
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ICT 141: Principles of Accounting First Semester 2021 -2022

Course Title: Principles of Accounting

I. Module 11: Accounting Cycle

II. Module Introduction/Rationale:

III. Module Outcomes:

IV. Lesson One: Accounting Cycle

Steps in Accounting Cycle

4. Prepare Trial Balance

As a student, what cycle do you follow in your life?

Answer as directed. Write your answer on the space provided.

1) Determine the steps in the accounting cycle.

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