Accounting and the Accounting Cycle, sound boring? To most people it is boring, but what most people don't know is that they use accounting almost everyday of their lives. Let's take a look at the Accounting Cycle and how some steps pertain to everyday life.
             The Accounting Cycle is defined as; "the process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance."(Warren149) There are seven basic steps in the Accounting Cycle. Analyzing and recording transactions in a journal is the first step in this process, also called journalizing. This is the same process that we use when we enter checks, ATM withdrawals, and deposits in to our check register. Each transaction that we do either increases or decreases our account. The same holds true for accounting. "Business books are kept by what is called the "double entry system," under which every debit is accompanied by a corresponding credit entry."(Price 5) Here is an example of a journal entry:
             Date 2004 Description Post ref. Debit Credit
             Notice how the completed entry contains the date, the accounts and amounts to be debited and credited, and a brief explanation of the transaction. This is the basic layout for every journal entry and is very similar to entering information into the check register, as you can see. The only difference is that the journal doesn't keep a balance as do our check registers
             The second step is posting transactions from the journal to the ledger accounts. A ledger is "the entire group of accounts maintained by a company." (Weygandt 54) Examples of accounts in the ledger would be; Cash, Accounts Receivable, Accounts Payable, Supplies, Owner's Capital, etc. Each ledger account is classified as one of five things; Asset, Liability, Owner's Equity, Revenues, or Expenses. These classifications help us in determining whether the acco...