Financial Accounting

1. Accounting Cycle
   1. Steps in the Accounting Cycle
      1. Transaction Identification and Analysis
         1. Gathering source documents
            1. Invoices
            2. Receipts
            3. Bank statements
         2. Understanding transaction types
            1. Sales transactions
            2. Purchase transactions
            3. Expense transactions
         3. Analyzing transaction impact
            1. Effects on assets
            2. Effects on liabilities
            3. Effects on equity
      2. Journal Entries
         1. Recording in the general journal
            1. Debits and credits
            2. Format and structure of journal entries
         2. Special journals for specific transactions
            1. Sales journal
            2. Purchases journal
            3. Cash receipts journal
      3. Ledger Posting
         1. Transferring journal entries to ledger accounts
         2. Maintaining general ledger
            1. Individual account ledgers
            2. Subsidiary ledgers
         3. T-accounts for visualization
      4. Unadjusted Trial Balance
         1. Compiling the trial balance
            1. Summarizing account balances
            2. Checking debits and credits balance
         2. Identifying errors
            1. Common errors in trial balance
            2. Techniques for error detection
      5. Adjusting Entries
         1. Purpose of adjusting entries
            1. Accruals
            2. Deferrals
            3. Depreciation and amortization
         2. Types of adjustments
            1. Prepaid expenses
            2. Accrued revenues and expenses
            3. Inventory adjustments
      6. Adjusted Trial Balance
         1. Preparation of adjusted trial balance
            1. Incorporating adjusting entries
            2. Ensuring internal consistency
         2. Reassessment of account balances
            1. Final adjustments before financial statement preparation
      7. Financial Statement Preparation
         1. Income statement preparation
            1. Revenue and expense reporting
            2. Calculating net income
         2. Balance sheet preparation
            1. Asset and liability classification
            2. Equity determination
         3. Cash flow statement preparation
            1. Direct vs indirect method
            2. Cash inflows and outflows presentation
      8. Closing Entries
         1. Purpose and process of closing entries
            1. Closing temporary accounts
            2. Updating retained earnings
         2. Post-closing trial balance
            1. Verifying all temporary accounts are closed
            2. Ensuring accounts are ready for the next cycle
   2. Importance of Each Cycle Step
      1. Accuracy and completeness of financial data
      2. Timely financial report generation
      3. Internal control reinforcement for error prevention
      4. Foundation for future business financial assessments
   3. Challenges in the Accounting Cycle
      1. Complexity in managing large volumes of transactions
      2. Ensuring compliance with accounting standards
         1. Adherence to GAAP or IFRS
      3. Technological and system integration hurdles
      4. Training and competence of accounting personnel
   4. Automation and Technological Enhancements
      1. Use of accounting software to streamline processes
      2. Integration of AI for predictive analysis and error detection
      3. Role of blockchain in transaction verification and security