Trade Company Accounting Cycle Stage: Can Prevent Fraud

YOGYAKARTA The accounting cycle of trading companies is a series of systematic recording processes, starting from recording goods buying and selling transactions to compiling final financial reports. This process takes place on a regular basis and is the basis for compiling financial reports for a certain period.

Through accounting cycles, the company can ensure that all transactions are properly recorded, from the beginning of the period to the closing and reversal process of the balance.

Understanding the cycle of quantity of trading companies also helps minimize mistakes and potential fraud. With a regular and systematic flow, any changes in the company's finances can be monitored clearly and accurately.

Compiled from various sources, there are at least 11 stages of accounting cycles for trading companies that occur systematically, repeatedly and sequentially in each transaction period. The process starts from recording transactions in public journals to creating reverse journals.

Compiled from various sources, here are the stages of the accounting cycle of trading companies that you need to know:

The first stage in accounting cycles is to record all business transactions to public journals. Every financial event, such as asset purchases or cash payments, is recorded in the form of journal entries.

For companies with large transaction numbers, the use of special journals such as cash journals in, cash out, purchases, and sales is very helpful so that the recording process is more efficient.

After being recorded in a public journal, the entry was posted to the auxiliary ledger. This step functions to group transactions based on certain accounts, such as receivables or debts. Data on the auxiliary ledger is then used as the basis for the preparation of balance sheets.

Balance balance before adjustment contains a list of accounts and their balances before the journal adjustment is made. The balance of the ledger is transferred to the balance sheet by placing the debt in the left column and credit in the right column. Companies with computer accounting systems usually get balance sheets automatically after the post is done.

The adjustment journal is carried out at the end of the accounting period to ensure revenue and expenses are recorded at the right time. The types of adjustments include payments in advance, acrually, and non-cash expenditures. This stage ensures that the financial statements really reflect the company's condition.

Balance balance after the adjustment contains updated accounts after the adjustment entry is made. The process is similar to the previous balance sheet, but the balance reflects the year-end adjustment. Accounts with zero balance do not need to be included.

Financial reports are the main objective of the entire accounting process. The documents compiled include balance sheets, loss profit reports, retained earnings reports, and cash flow. This information is very important for investors, creditors, and other stakeholders in assessing the company's performance.

The accounting work sheet is used to help accountants complete each stage in the accounting cycle. It contains columns for balance sheets that have not been adjusted, journal adjustments, balance balance sheets after adjustments, and financial reports. This sheet facilitates the checking process and interstage comparisons.

The closing journal was created to close temporary accounts such as income and expenses, then move the balance to a permanent account. This step was taken at the end of the accounting period and is often referred to as the process of covering the book'.

The income summary is an interim account used to accommodate income balances and expenses before being transferred to retained earnings. This account is only used during the closing process and does not appear during the running period.

Balance balance after the closure contains a permanent account that still has a balance after the closing journal was created. This document ensures all transient accounts have been properly closed and the balance of debt-credit is maintained.

The last stage is to create a reverse journal. This journal was created at the beginning of the new period to reverse several previous journal adjustments, particularly those related to acrual or pre-payment. This step is optional, depending on the company's needs.

That's information about the trading company's accounting cycle. Get news updates of other options only on VOI.id.