What is the process of accounting?
The primary purpose of accounting is to provide useful information for decision making. To be able to produce the desired information, accountants carry out a series of activities in the form of systematic collection and processing of accounting data during the current period, usually for one year. The business of systematic accounting data collection and processing in one accounting period is known as an accounting process or accounting cycle.
The first step in the accounting cycle is to identify transactions. Accountants must identify transactions so they can be recorded correctly. Not all transactions can be recorded, operations that can be recorded are transactions that result in changes in the company’s financial position and can be objectively assessed into monetary units. Also, the trade to be registered must have proof. If there is no evidence, the transaction cannot be recorded and reported in the financial statements. Confirmation of transactions is usually in the form of receipts, receipts, invoices, proof of cash out, memo deletion receivables, and so forth. The evidence must, of course, be valid and verified.
After identifying the transaction, the accountant must determine its effect on the financial position. For simplicity, you can use a mathematical equation: Assets = Liabilities + Equity. The recording system is a double-entry system, where every transaction recorded will affect the financial position being debited and credited in the same amount so that each transaction affects at least two accounting accounts.
After the transaction information is analyzed, then recorded coherently in a journal book. A journal is a chronological record of transactions that occur in an accounting period. The process of recording transactions in a journal is called journalizing. There are two types of journals, general journals, and specialized journals. General journals are known as journals only. Usually, the recording of transactions is entered into one account that is debited and one account credited. Meanwhile, specialized journals are held to improve the efficiency of record of repetitive operations. Examples such as sales journals, purchase journals, cash receipt journals, and others.
Steps in the accounting process?
Data Identification and Measurement
Identifying and measuring data is the first thing that needs to be done in the accounting process detail website. Every transaction or event will relate to actions that have been completed, for example selling goods. While the desire to trade goods does not include sales, because it has not been implemented or just a dream. The data that has been identified then needs to be measured. The right measuring unit is the unit of money (rupiah, dollar, yen, etc.). From these measurements, the accounting process can proceed to the next stage.
Processing and Reporting
Data processing and reporting includes recording, classification, and summarizing activities. Transaction recording means collecting data chronologically. The detailed recording will make it very easy to analyze cash flow. In addition to being recorded, company transactions are also classified as related groups. The classification of transactions is significant because the presentation can be summarized. While summarizing is presenting information that has been grouped into report form as desired by the user. The report can be in the form of a trial balance, adjustment journal, closing journal, to the reversing journal.
Accounting reports (accounting reports) are the results of the accounting system. Many types of accounting reports. The sample of a report produced depends on the parties who will use the story. One of the main types of accounting reports is financial statements (financial statements). In addition to financial reports, there are many other types of reports, including reports for taxes in the form of Annual Tax Returns (SPT), reports to the government, for example to Bapepam, and special reports for internal corporate management. For the financial statements themselves consist of profit/loss statements, reports of changes in capital, balance sheets, and statements of cash flows.