Unit 4: The Accounting Cycle

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Cash Receipt Journals

Where you record all cash that has been received.

Cash Payments Journal

Where you record all transactions where cash has been paid out

Cash Book & Petty Cash

The cash receipts journal and cash payments journal can be replaced by the cash book, which is simply a combination journal showing all receipts & all payments together

Petty cash, which is simply a sum of cash on hand kept to pay small expenses, can also have its own separate journal

Sales Journal

Where you record income on credit

Debtor transactions

Complete trial balance

Shows profit or loss of a business

Includes income & expenses

Accounting period

Usually 1 year

2.) The Statement of Changes in Equity

Changes to owner's equity:

Capital

Drawings

Profit: Income- Expenses

3.) Balance Sheet

Whereas the income statement and statement of changes in equity show changes over a certain period of time, the balance sheet shows the balances of assets, liabilities and owner's equity on a particular day

4.) Cash Flow

A statement (report) of flows (both in & out of the businesses) of cash

Includes:

Operating

Investing

Financing

Net Increase/ Decrease in Cash

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