AYB221 Lecture Notes - Lecture 6: Accounting Period, Cheque, Current Liability
Lecture 6: The General Ledger
and Reporting Cycle
Module 1 – Primary activities in GL & Reporting Cycle
- Input, Storage, Processing, Output, Controls
- General Ledger, Expenditure, Revenue, Payroll
Objective of General Ledger Cycle
- This cycle collects and reports data
- The GL is the hub of any accounting system and is the core ledger of any
organization
- The objective is to collect all transactions of an organization and summaries
results in the form of reports
- This is where adjustments are made to ensure the accounting matching
principle occurs
- Functions
o Collect, classify, process and store transaction
o Produce accurate, reliable, timely reports
How GL Links to Other Cycles
Processing
- Types of processing:
find more resources at oneclass.com
find more resources at oneclass.com
o Coding – assigning numbers and letters based on a classification
o Charts of Accounts is the major form of coding system used in
accounting
What are the inputs to the GL Cycle?
- GL cycle manages 3 key inputs:
1. Summarises data from other cycles
2. Entries that originate in the GL&R cycle
3. Budget data
What Data becomes part of GL?
- The GL and financial reporting cycle extract and summarises transactional
data from:
o GL and Journal table
o Accounts Receivable (customer table)
o Accounts Payable (Supplier table)
o Payroll Data (Payroll table)
- Example using MYOB: Sales Invoice -> Sales Journal -> summarized to GL
o *Edit recap transaction
o GST Paid – buying/costuming items DR (negative liability)
o GST Collected – selling items
Key GL Activities
1.0
•Update the general ledger
2.0
•Post adjusting entries
3.0
•Prepare Financial Statements
4.0 •Produce Managerial Reports (budgets)
find more resources at oneclass.com
find more resources at oneclass.com
Entries that Originate in GL&R Cycle
1. Adjusting entries: Originate from the accountant’s office after the initial trial
balance
2. Reversing entries: Direct reversal of a prior adjustment entry eg reversing wages
accrual
3. Error correction entries: Correct an error made in previous journal entry. Put
through adjustment to get correct amount recorded
4. Revaluation entries: Revalue an asset i.e. property
Why are Adjusting Entries Important?
- Accrual accounting
- Accounting period concept
- Matching principle
Five Categories of Adjusting Entries
- Prepaid expense
- Accrued revenues
- Depreciation
- Accrued expenses
- Unearned revenues
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Lecture 6: the general ledger and reporting cycle. Module 1 primary activities in gl & reporting cycle. The gl is the hub of any accounting system and is the core ledger of any organization. The objective is to collect all transactions of an organization and summaries results in the form of reports. This is where adjustments are made to ensure the accounting matching principle occurs. Functions: collect, classify, process and store transaction, produce accurate, reliable, timely reports. Types of processing: coding assigning numbers and letters based on a classification, charts of accounts is the major form of coding system used in accounting. Gl cycle manages 3 key inputs: summarises data from other cycles, entries that originate in the gl&r cycle, budget data. The gl and financial reporting cycle extract and summarises transactional data from: gl and journal table, accounts receivable (customer table, accounts payable (supplier table, payroll data (payroll table)
