Chapter 2

Accounting Cycle of a
Service Business
and Bank Reconciliation
It covers the ongoing process of accounting activities.

1. Computerized accounting system

2. Manual accounting system

ACCOUNTING CYCLE
includes all accounting activities, beginning
with entering transaction and ending with
closing.

MAINTAINING ACCOUNTS
may involve adding new accounts to the chart of
accounts.
Figure 2.1 ACCOUNT MAINTENANCE
GENERAL JOURNAL

• Journal
is a record of debit and credit parts of each
transaction in date sequence.

• Posting
the process of updating the ledger account balances
with all debits and credits.
GENERAL JOURNAL TRANSACTION

• General Journal Tab

is used to enter and post general journal
entries and to make corrections or
delete existing journal entries.
 Figure 2.2 JOURNAL ENTRIES

• Enter General Journal Entries

• Changing or Deleting General Journal Transactions
• Adding Lines to a Transactions
Finding Journal Entries

Figure 2.3 FIND JOURNAL ENTRY DIALOG BOX

ADJUSTING ENTRIES

changes entered into the computer to update general

ledger accounts at the end of a fiscal period.
Figure 2.4 TRIAL BALANCE BEFORE ADJUSTING ENTRIES
Figure 2.5 GENERAL JOURNAL (Adjusting Entries)
REPORTS

Figure 2.6 REPORT SELECTION DIALOG BOX

Figure 2.8 JOURNAL REPORT SELECTION DIALOG BOX
Figure 2.9 CUSTOMIZE JOURNAL REPORT DIALOG BOX
• Printing the Contents of a Report window
• Copying report information to the clipboard in spreadsheet and word processor formats.

Figure 2.7 COPY REPORT TO CLIPBOARD

General Journal Report

is useful in detecting errors and verifying the equality of debits and

credits.
FINANCIAL STATEMENT

• The Income Statement

provides information on a business’s net income or net loss over a
specified period of time.

• Statement of Owner’s Equity

shows the changes to owner’s equity that occurred during the fiscal
period.

• Balance Sheet
provides information on the overall financial strength of a business as of a
specific date.
Figure 2.10 INCOME STATEMENT BY MONTH OF THE YEAR
Figure 2.11 Statement of Owner’s Equity
Figure 2.12 BALANCE SHEET
GRAPH
refers to a pictorial representation of data that
can be depicted on a computer screen or printed.
Figure 2.13 GRAPH SELECTION DIALOG BOX
Figure 2.14 EXPENSE DISTRIBUTION GRAPH
BANK RECONCILIATION

Figure 2.15 BANK RECONCILIATION

Figure 2.16 BANK RECONCILIATION REPORT
CLOSING JOURNAL ENTRIES

to close all of the temporary income statement accounts

to the income summary accounts.
Figure 2.17 GENERATE CLOSING JOURNAL ENTRIES DIALOG BOX
Figure 2.18 CLOSING ENTRIES