What Are The Stages Of Accounting?


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Connor Sephton answered
There are four distinct steps, or stages, in a regular accounting cycle; however, there are different types of accounting (such as management or merchandising accounting)... Therefore, all of these stages may not be adhered to in certain cases.

The Stages Of Accounting

• In general, the first stages of accounting include isolating a transaction or financial occurrence and creating a document to record this transaction. After a document is opened for a transaction, it must be quantified using dollar and cent amounts (depending on national currency names). Then, the transaction must be applied to a certain account as a credit or debit.
• The second stage of accounting happens when a journal is updated to record a financial event; there are different types of journals for each happening, including cash receipt journals and sale journals. These transactions will always be recorded according to when they happened.
• After a set accounting period passes, a third stage will begin. During this period, all accounts are listed by credit and debit, and a balancing of the account is undertaken. Errors are noted when columns for debit and credit do not balance, and the causes are investigated. Adjustments are made to correct mistakes.
• The fourth stage begins when adjustments are entered into the accounts and the balance is recalculated. At this point, the accountant can begin to prepare financial statements that detail income, debts, and other assets and liabilities. Closing journals are prepared to finish the accounting cycle and summarize the account's activity. Then, the account is closed.

Students learn the stages of the accounting cycle in colleges and universities. After graduating and fulfilling all course requirements, they may become certified accountants who work for firms or open their own businesses. Specialized accounting skills may be applied to a particular segment of accounting, such as management accounting. However, all types of accountants will always be familiar with the four stages listed above, as they comprise the basic cycle of formal accounting.

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