10/6/23, 12:37 AM
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Quiz 1 Cheat Sheet (Wisdom Ufondu)
Thursday, October 05, 2023
10:16 PM
Steps of the Accounting Cycle
1. Transactions are analyzed and recorded in the journal
2. Transactions are posted to the ledger
3. An unadjusted trial balance is prepared
4. Adjustment data are assembled and analyzed
5. Adjusting entries are journalized and posted to the ledger
6. An adjusted trial balance is prepared
7. Financial statements are prepared
8. Closing entries are journalized and posted to the ledger
9. A post-closing trial balance is prepared
Importance of Business Entity Concept
The business entity concept is important because it keeps the
business and its owner separate, which allows governments to
regulate businesses more easily as they are not controlled by their
owners. This makes owning a business easier as an owner does
not have to pay taxes on all of their personal income
Importance of Cash vs. Accrual
Accrual accounting gives a better indication of business
performance because it shows when income and expenses
occurred. Cash accounting may be more beneficial for certain tax
purposes, and to keep tabs on cash flow
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