Paper type: Assignment Pages: 6 (1493 words)
ASSIGNMENT NAME: HOW ZHEN YI STUDENT ID: SCKL1900465 TOPIC: ACCOUNTING CYCLE McDonald’s Introduction McDonald’s is an American fast food company, established in 1940 as a restaurant managed by Richard and Maurice McDonald, in San Bernardino, California, United States. McDonald’s is the world’s biggest restaurant chain by income, serving over 69 million customers daily in over 100 nations across 37,855 outlets as of 2018. Besides, McDonald’s mainly sells hamburgers, all kinds of chicken, Cheeseburgers, French fries, breakfast items, porridge, soft drinks, milkshakes, wraps, pie, and dessert.
McDonald’s also have McCafe, McCafe is used high-quality coffee made from Arabica coffee beans, freshly ground coffee to produce the wonderful coffee. For the children, McDonald’s has prepared indoor or outdoor playgrounds and happy meals. Furthermore, McDonald’s is offered as either dine-in meaning is customers can choose to eat in a restaurant or take-off meaning is customers can choose to take the food off the place. Moreover, McDonald’s app can be download through Google play store and App Store to let our customers enjoy a lot of deals and we provide delivery in 24 hours to customer’s home when we get the customer order through this app, our service is let our lovely customer having a meal at the house or office when their inconvenience to hang out.
Most McDonald’s restaurants provide both drive-through service and counter service, with indoor or outdoor seating. On top of that, McDonald’s afford to customers easily and conveniently. Nowadays, McDonald’s became perfectly successful and become the biggest restaurant organization in the world. Accounting Cycle The accounting cycle is a step by step process of classifying, recording, crediting payments made, summarizing and accepting a business financial transaction across a fiscal year. Moreover, the sole purpose of recording transactions and keeping track of expenditures and income is turning this data into meaning financial information by presenting it in the form of an income statement, balance sheet, statement of owner’s equity, and statement of cash flows. Furthermore, Company normally balances their books at year-end, other company may prefer to resolve the books at every week or every month. The accounting cycle has nine-steps to recording business transactions. Accounting cycle step 1 is Identifying and Analyzing Transactions. The accounting proses commenced with identifying and analyzing transactions. Transactions only include directly related to the company’s financial. These transactions included sales revenue, any purchases, any expenses, acquisition of assets or debt payoff. Use source documents like purchase orders, receipts, invoices, payment slips help in identifying business transaction effects on specific accounts. Hence, effect means determining what item increased or decreased and with how much. For example, the sales for a day in a retail store are collected on a cash register machine. These sales become inputs into the accounting system. Since identifying business transactions, decide which account they belong to. After identifying and analyzing the transactions data in the first step, the transaction data is entered in the general journal or Book of Original Entry. Accounting cycle step 2 is Recording in the Journals. For single-entry bookkeeping is a way of bookkeeping that identifies only one side of business transactions and usually includes only a record of cash and personal accounts with account receivable and account payable. For double-entry bookkeeping is based on the case that every transaction has two parts. Every transaction includes a credit entry in one account and a debit entry in another account. This meaning is every transaction must be recorded in two accounts; one account will be credited because it has given value and another account will be debited because it has receivable value. The debit side and credit side must be equal. After recording the transaction in journals, transactions are transferred and posting to the ledger accounts. Accounting cycle step 3 is Posting to the Ledger. The general ledger is under the name of the book of final entry. These accounts are displayed by T-accounts which record the credits on the right side and the debits on the left side and show their current balances. The general ledger is a record of all of the accounts that the company employs. A general ledger separated accounts into three account types: Assets account, Liabilities account, and Equity account. Most company have many of the same general accounts like account receivable, account payable, cash, any expenses, any purchases, sales revenue, return outwards and return inwards, but some company has special accounts particular for their operations. The fourth step is the unadjusted trial balance. An unadjusted trial balance is prepared to test the balance of the credits side and debits side. All account surplus extracted from the ledger. The credits balance is recorded on the right side and the debits balance is recorded on the left side. Make sure the two-side total is the same. If the two columns are divergence found in the amounts, it implies an error in the posting of transactions. Hence, it must be corrected straightway. It may have posted an entry or figure wrongly and may have even forget to post an entry in the first part. We should identify the error by making the correct entry. Even the column gets balanced, there may be the eventuality of an error. Hence, have to check all the entry again. After the unadjusted trial balance is adjusting entries. Adjusting entries are accounting cycle fifth step. When the end of the accounting period, some revenue might have been earned but not yet entered in the books or some expenses might have happened but not yet recorded in the journals. Use adjusting entries to record transactions that have happened but not yet recorded. For example, the proprietor earned interest on a bank account balance, the proprietor not yet recorded the interest in books. But interest appears on the bank statement, use adjusting entries to record the interest in the books. After the new entries are done, we can just move on a new trial balance. At the accounting cycle Adjusted Trial Balance is the sixth step. The adjusted trial balance is to test the equality of the credits side and debits side. After that, the next step is to analyze the financial incident that incurred in the company entire the accounting cycle. If any error at an adjusted trial balance, it may adjust entries of the amount wrongly, corrected immediately. Step 7 financial statements are the most crucial part of the accounting cycle. When the new trial balance is equality between the debits side and the credits side, the financial statements can be ready. The financial statements are one of the primary outputs of the accounting system. Shareholders’ Equity Statement, Balance Sheet (Statement of Financial Position), Income Statement (Statement of Financial Performance), Cash Flow Statement and Statement of Retained Earnings are the organization of the financial statements. The first financial statements are the income statement, in the income statement is about the revenue and expenses of the company. From the operating profit, other expenses are deducted to calculate the net income of the year. The second financial statements are the balance sheet, in the balance sheet is about the asset and the liabilities of the company. And check the balance of the assets and the balance of the liabilities whether equality. The next of the financial statements is the statement of retained earnings. Retained earnings are the amount of net income remainder for the company after it has paid the dividend to shareholders. The last of the financial statements are the cash flow statement. The cash flow statement has three main components, cash from operating activities, cash from investing activities and cash from financing activities. Close entries are the penultimate step in the accounting cycle. Close entries are formed journal entries made by the manual accounting system at the end of the accounting period to divert the balance in the temporary accounts to permanent accounts. Temporary accounts include revenue, expenses, losses, owner’s drawing accounts, dividend, and gains. Any accounts list is included in the balance sheet, except dividends paid are permanent accounts. Close entries need to leave the accounts empty with a zero balance to enter the transactions for the new accounting period. Close entries just made for temporary accounts, not for permanent accounts and balance sheet accounts. For the last step in the accounting cycle is post-closing trial balance, the post-closing trial balance is to list all the balance sheet accounts are non-zero balances at the end of a reporting period. The post-closing trial balance to ensure the total of credits balances and debits balances is equality, which should net to zero. As the temporary accounts are already closed at step 8, the post-closing trial balance only contains permanent accounts. In conclusion, the accounting cycle makes the recording of financial data more easily manage to outside users and the accounting cycle refers to the process of generate financial statements. The goals of the accounting cycle are to produce well-organized financial data that can be conveyed effectively both to the external users and internal users.
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ASSIGNMENT NAME HOW ZHEN YI STUDENT ID SCKL1900465 TOPIC ACCOUNTING CYCLE. (2019, Aug 20). Retrieved from https://studymoose.com/assignment-name-how-zhen-yi-student-id-sckl1900465-topic-accounting-cycle-essay