Explain the recording, classifying, summarizing and presenting phases of accounting with comprehensive example

Answer 1

Recording starts with recording entries in the General Journal. In order to do this, you must know how to classify your items, whether an item is an asset, liability, income or expense, and whether a balance sheet item is current or non-current. Once you can classify your items, you can record them correctly in the journal. From there you will post the entries into the General Ledger.

Once the GL is all written up and you've finished all your posting, you can extract a trial balance, which is a summary of all your GL accounts. From this unadjusted TB, you can put through your adjusting entries to come up with an adjusted TB.

Once that's done, you can prepare your financial statements based on the items in your adjusted TB, i.e. the balance sheet, income statement, statement of changes in financial position and the cash flow statement, which are your 4 core financial statements. These are part of the reports which you will present to management.