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Accounting Cycle Paper

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Autor:  anton  17 December 2010
Tags:  Accounting
Words: 690   |   Pages: 3
Views: 275

Accounting Cycle

In my organization a lot of our systems have switched over to technology systems that are designed to automate all processes. Purchasing, central supply and receiving use UPC scanners to match received packages to their purchase order while adding the items to the inventory. Materials management receives the packages on a purchase order in the computer electronically. This makes the purchase order payable in the purchasing system shared between materials management and accounting. In accounting I can reference a purchase order on an invoice to the purchase order in the system and find out if I'm missing a packing slip because it didn't get up to accounting or if it's because the items have not yet been received. After being received in the system the purchase order and packing slip are stapled together by receiving and signed by the receiving clerk, the shipping clerk, and the end receiver who originally placed the item order. All the completed purchase orders are brought up to the accounting office on a weekly basis.

The accounting office must match invoices to the purchase orders and ensure that all items listed on the invoice match the purchase order and packing slip. Once an invoice has been verified as being fully received it can be sent for approval from the supervisor of the department who ordered the items. When an invoice has been fully received and approved accounting can create a batch to pay invoices and process the batch for approval by the accounting supervisor and check creation by the controller's office.

While our system allows for invoices to be tagged with organization and account codes for general ledger uses later, invoices not entered into the system are not classified in the system and must be journalized separately. At the end of each month any invoices for the month or previous are entered in excel and classified by the organization and account codes the charges should be journalized to. Using the same system invoices are entered in, journals are entered within the first 4 business days of the new month so they can be charged to the month the cost should be budgeted to. The journal batches need to be printed, signed by my manager, and posted manually in the controller's office.

After 7 business days the controller's office has to have all journals posted and also run the automatic reversal at the start of the new month so the invoices can be paid without doubling the charges. Once this process is completed my manager and the accounts payable supervisor start running trial balances and checking for credits on accounts. Should a credit show up it usually means an invoice was double charged to an account; the account must be adjusted so the budget is reflected correctly. Adjusting entries don't have a deadline, but they are preferably done by the 10th business day so that the adjusted trial balance can be run and checked for additional problems. A receivables department also works with the accounting department to ensure the income entries are correctly coded as well.

Monthly financial statements are run and distributed to budget managers once the adjusted trial balances are verified and approved. Because of carry over through each month and annual contracts paid once and distributed over time the budget is only closed once at the end of the year. The accounting cycle from transaction to financial statement repeats each month until the end of the fiscal year when the closing entries are processed after the adjusted trial balance and financial statements are approved. Since we are closing the entire year at once we are given 10 working days instead of the standard 4 to prepare all the end of the year entries. This also extends the trial balance and adjustment process out an additional week. However, since we are a governmental organization the financial statements for the year are not cleared for at least a year after the fact. Both the independent accounting firm contracting with us, and the public court auditors must check and clear the books to be closed. Currently the 2004-2005 and 2005-2006 fiscal years remain open for adjustment.



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