Acc 421 - Accounting Cycle

Accounting Cycle

Rebecca Messmer

ACC 421

November 4, 2013

Michael Guertin

Accounting Cycle

A small towing service, Todd’s Towing, does not have that many steps in the accounting cycle. An accounting cycle is “a process that includes the following steps of identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an adjusted trial balance, preparing the financial statements, recording and closing entries, preparing a post-closing trial balance, and sometimes recording reverse entries” (Accounting Coach, 2013, p. 1).

My husband and I had owned this business for over 20 years. Every year the trucks had to remain inspected by the Department of Transportation to ensure that each truck met the guidelines. How he documented the information was very simple. When a call came in, he would post the company and address to notebook. This would include what kind of job is required and for how much. Each company account had his or her own notebook and customers who desired a tow remain labeled “Other,” meaning it was for anybody else but for the business company accounts. This would be identifying, collecting and analyzing documents and transactions, and recording the transaction in a journal. In a case of gas receipts, receipts for parts for their truck, or anything the truck needed such as fire extinguisher, chains, and kitty litter, these documents was put into a folder every month to determine how much the business made for the month.

At the end of every month, which would be the accounting period, it was my job to type the transactions into an Excel format per company. These transactions included the date, what company, what the job was, and for how much. I had to make two copies per company, one for our records, and one for the business account. I would either mail or drop off each account for payment. The company accounts had to the tenth