Basic Steps in the Accounting Process: The process of accounting can be defined as a series of activities, which are initiated at the opening of a transaction and accomplished with the closing of books. The series of activities involves identifying, recording, which further involves categorizing and summarizing the data, and communicating financial transactions. The order in which these activities are performed is usually termed as the accounting process. Identify The first step of the accounting process is the identification of financial transactions, which indicates an economic activity that is pertinent to a business organization. A business usually performs a number of transactions, however, according to the rule of accounting, only the financial transactions of a business are recorded in the books of accounts. Financial transactions refer to all those transactions, which are expressed in monetary terms. Hence, it is essential that financial transactions are identified in the first step of the accounting process. Record The second step of the accounting process is the recording of financial transactions, in which documentation plays an important role. It involves the documentation of the identified financial transaction, in order to provide detailed information of the financial activities of an organization. The process of recording involves the systematic recording of all events and transactions in a chronological order in the journal and subsidiary books. This is followed by classification, after which, the transactions are further recorded in the respective ledger accounts. Once recording is complete, transactions are summarized in a trial balance . The preparation of a trial balance is useful in determining the profits and losses and the financial condition of a business. Communicate The third step of the accounting process is communicating the results of business operations. The results of a business, such as the profits and losses of a business are communicated to the users, which include the owners, shareholders, creditors, and managers. To identify: The accounting tasks as identification (I), recording (R), or communication (C) aspects of accounting by Company C.

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Chapter 1, Problem 1.1E

To determine

Basic Steps in the Accounting Process:

The process of accounting can be defined as a series of activities, which are initiated at the opening of a transaction and accomplished with the closing of books. The series of activities involves identifying, recording, which further involves categorizing and summarizing the data, and communicating financial transactions. The order in which these activities are performed is usually termed as the accounting process.

Identify

The first step of the accounting process is the identification of financial transactions, which indicates an economic activity that is pertinent to a business organization. A business usually performs a number of transactions, however, according to the rule of accounting, only the financial transactions of a business are recorded in the books of accounts.

Financial transactions refer to all those transactions, which are expressed in monetary terms. Hence, it is essential that financial transactions are identified in the first step of the accounting process.

Record

The second step of the accounting process is the recording of financial transactions, in which documentation plays an important role. It involves the documentation of the identified financial transaction, in order to provide detailed information of the financial activities of an organization.

The process of recording involves the systematic recording of all events and transactions in a chronological order in the journal and subsidiary books. This is followed by classification, after which, the transactions are further recorded in the respective ledger accounts. Once recording is complete, transactions are summarized in a trial balance. The preparation of a trial balance is useful in determining the profits and losses and the financial condition of a business.

Communicate

The third step of the accounting process is communicating the results of business operations. The results of a business, such as the profits and losses of a business are communicated to the users, which include the owners, shareholders, creditors, and managers.

To identify: The accounting tasks as identification (I), recording (R), or communication (C) aspects of accounting by Company C.

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