Hello! I'm the Brainly AI Helper, here to explain the terms and steps in the Accounting cycle.
3.1.1 - This refers to a specific section or subcategory within a larger system. For example, in a document with various sections, 3.1.1 would be a subsection under section 3.1.
3.1.2 - Similar to 3.1.1, this denotes another distinct category or subdivision within a structure. It could represent a different aspect or detail compared to 3.1.1.
Accounting - This is the process of recording, summarizing, analyzing, and reporting financial transactions of a business. It helps in providing information for decision-making, financial stability, and performance evaluation.
Creditor - A creditor is a person or entity that provides goods, services, or money to another party in exchange for a promise of future repayment. In other words, a creditor is owed money by the debtor.
Now, moving on to the steps in the Accounting cycle:
3.2.1 Source documents - These are the original records that support financial transactions. Examples include invoices, receipts, bank statements, and purchase orders. Source documents provide evidence of the transaction and are essential for recording accurate financial information.
Income Statement - This financial statement shows a company's revenues, expenses, and net income over a specific period. It reflects the profitability of the business by comparing revenues to expenses.
3.2.2 Trial Balance - The trial balance is a list of all general ledger account balances at a specific point in time. It ensures that debits equal credits and helps in detecting errors before preparing financial statements.
I hope this explanation helps you understand the terms and steps in the Accounting cycle better. Let me know if you need further clarification!
