Transaction Processing

Sequential

Block

Hierarchical

Mnemonic

Used to decide which transactions are recordable in the AIS.

Record transactions

Posting to ledger.

Preparing trial balances.

Preparing financial statements.

Closing accounts.

The Accounting Cycle

1. Obtain information about external transactions from source documents.

2. Analyze transactions.

3. Record the transactions in a journal.

4. Post from the journal to the general ledger accounts.

5. Prepare an unadjusted trial balance.

6. Record adjusting entries and post to the general ledger accounts.

7. Prepare an adjusted trial balance.

8. Prepare financial statements.

9. Close the temporary accounts to retained earnings (at year-end only)

10. Prepare a post-closing trial balance (at year-end only)

Sequential numbering of source documents.

Physical security for source documents.

Transaction limits.

Audits.

Proper authorizations and supervisions.

Information technology controls.