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What are the 4 phases accounting?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rohith asked almost 3 years ago

Hi I am on of the CA Intermediate | CA IPCC student. Can I know, What are the 4 phases accounting?

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9 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered over 2 years ago

The four phases of accounting are as follows: Recording Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs. Accounting records are used for taxes, budgeting, reporting and business plans. Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used in personal and business situations. During the recording phase, transactions have to be classified into categories. This is for tax purposes. In taxation there are different categories that can provide savings. Classifying In order to determine how much one spent in each of the categories one has to classify the records. For example in a business, office supplies can be deducted from the taxes. Dining and entertainment can also be used as a deduction. Summarizing After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read. From this one can discover how much was spent, what was kept, what was paid out, where and other information. The summarizing stage makes the interpretation of the data that much easier. One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or company is going financially. Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found. Interpreting If you look at it from a business standpoint there may be equipment that is needed so interpreting the data can help find the extra money for the equipment. It can also be used as a phase to determine stock information. The four phases of accounting are recording, classifying, summarizing and interpreting. Some people who work in finance often say that communication, although it is not officially one of the accounting phases, it should still be considered an important step. This means that good communication must be observed during all four phases of the accounting cycle to help things run as smoothly as they possibly can. • The first phase of accounting is recording which can also be called bookkeeping. During this phase, any financial transactions that have taken place over the financial period, whatever time frame that may be, must be chronologically recorded in a systematical way. The accounting period can either be each month, quarterly or at the end of every year. The correct books and databases must also be used. • The second phases of accounting is classifying, which means that all financial items and transactions must be sorted, organized and grouped under certain names, categories and account depending on the nature of the transaction for example, travel expenses. • The third phrase is summarizing means that all data has to be summarized at the end. It is essential that this summarized data is easy to understand for people who work within the accounting department and for people who are not, as these files may be read by people from all departments within the company. Visual aids such as charts and graphs may also be used alongside the data presented. • The final stage of accounting is interpreting which is where people look at the data that has been recorded, classified and summarized and they interpret that data. By doing this, the people examining the data will be able to reach informed decisions about the financial status of a company. This data will also be used to come up with future financial plans for the business.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

Summarizing The summarizing phase of accounting involves summarizing the data after each accounting period, such as a month, quarter or year. The data must be presented in a manner which is easy to understand and use by both external and internal users of the accounting statements. Graphs and other visual elements are often used to complement the text data.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Classifying The classifying phase of accounting involves sorting and grouping similar items under the designated name, category or account. This phase uses systematic analysis of recorded data in which all transactions are grouped in one place. For example, "travel expenses" might be a category that accountants use to classify expenses relating to company travel. The term "ledger" refers to the book in which classifications are recorded. Summarizing The summarizing phase of accounting involves summarizing the data after each accounting period, such as a month, quarter or year. The data must be presented in a manner which is easy to understand and use by both external and internal users of the accounting statements. Graphs and other visual elements are often used to complement the text data. Interpreting The interpreting phase of the accounting process in concerned with analyzing financial data, and is a critical tool for decision-making. This final function interprets the recorded data in a manner which allows end-users to make meaningful judgments regarding the financial conditions of a business or personal account, as well as the profitability of business operations.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Classifying The classifying phase of accounting involves sorting and grouping similar items under the designated name, category or account. This phase uses systematic analysis of recorded data in which all transactions are grouped in one place. For example, "travel expenses" might be a category that accountants use to classify expenses relating to company travel. The term "ledger" refers to the book in which classifications are recorded.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

** > What are the 4 phases accounting ** --Broadly speaking, there are four steps, or phases, which take place in accounting. These are: • Identification and Record • Sorting and Classification • Summarizing and Presentation • Interpretation The four phases of accounting are as follows: **Recording** Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs. Accounting records are used for taxes, budgeting, reporting and business plans. Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used in personal and business situations. During the recording phase, transactions have to be classified into categories. This is for tax purposes. In taxation there are different categories that can provide savings. **Classifying** In order to determine how much one spent in each of the categories one has to classify the records. For example in a business, office supplies can be deducted from the taxes. Dining and entertainment can also be used as a deduction. **Summarizing** After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read. From this one can discover how much was spent, what was kept, what was paid out, where and other information. The summarizing stage makes the interpretation of the data that much easier. One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or company is going financially. Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found. **Interpreting** If you look at it from a business standpoint there may be equipment that is needed so interpreting the data can help find the extra money for the equipment. It can also be used as a phase to determine stock information.

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

Broadly speaking, there are four steps, or phases, which take place in accounting. These are: • Identification and Record • Sorting and Classification • Summarizing and Presentation • Interpretation In the first stage, the accountant will need access to all financial records and paperwork the business or individual. This may include receipts, invoices and vouchers. From these articles, the accountant can create a log containing every financial transaction of the business or individual. From this log, the accountant can get an idea of how much money is being spent and earned. An accountant is not permitted to create and log transactions which have not happened. Also, an accountant should not omit delete records from the log. Instead, they should make amendments to records in the log, along with the reason why the amendment was needed. In the second stage, all the transactions in the log must be sorted and categorized into different groups. First of all, as stated above, the accountant must identify whether each transaction represents income or expenditure. After this has been identified, the account must link the transaction with the appropriate field within the business or the individual's life. For example, within the expenditure category, you may have groups for expenses such as travel, marketing and production. In the third stage, the accountant must communicate a summary of the figures they have found, and how they found them. Computer software may be used to create texts such as graphs, charts, spreadsheets and invoices, as well as having the information clearly presented in a written article. The final stage requires that the account works closely with the business or individual in order to make them more efficient and increase their profit. For example, there may be particular areas of expenditure which the account feels are too high, and need to be reduced. They will then work with the company or individual in order to come up with methods and processes to reduce these areas of expenditure.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read. From this one can discover how much was spent, what was kept, what was paid out, where and other information. The summarizing stage makes the interpretation of the data that much easier. One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or company is going financially. Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found.

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Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Rohith, **The four phases of accounting are as follows:** 1. **Recording** - Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs. Accounting records are used for taxes, budgeting, reporting and business plans. - Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used in personal and business situations. 2. **Classifying** - In order to determine how much one spent in each of the categories one has to classify the records. For example in a business, office supplies can be deducted from the taxes. Dining and entertainment can also be used as a deduction. 3. **Summarizing** - After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read. From this one can discover how much was spent, what was kept, what was paid out, where and other information. - The summarizing stage makes the interpretation of the data that much easier. One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or company is going financially. Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found. 4. **Interpreting** - The final stage of accounting is interpreting which is where people look at the data that has been recorded, classified and summarized and they interpret that data. By doing this, the people examining the data will be able to reach informed decisions about the financial status of a company. This data will also be used to come up with future financial plans for the business.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered almost 3 years ago

Recording Recording is a basic phase of accounting that is also known as bookkeeping. In this phase, all financial transactions are recorded in a systematical and chronological manner in the appropriate books or databases. Accounting recorders are the documents and books involved in preparing financial statements. Accounting recorders include records of assets, liabilities, ledgers, journals and other supporting documents such as invoices and checks. Classifying The classifying phase of accounting involves sorting and grouping similar items under the designated name, category or account. This phase uses systematic analysis of recorded data in which all transactions are grouped in one place. For example, "travel expenses" might be a category that accountants use to classify expenses relating to company travel. The term "ledger" refers to the book in which classifications are recorded. Summarizing The summarizing phase of accounting involves summarizing the data after each accounting period, such as a month, quarter or year. The data must be presented in a manner which is easy to understand and use by both external and internal users of the accounting statements. Graphs and other visual elements are often used to complement the text data. Interpreting The interpreting phase of the accounting process in concerned with analyzing financial data, and is a critical tool for decision-making. This final function interprets the recorded data in a manner which allows end-users to make meaningful judgments regarding the financial conditions of a business or personal account, as well as the profitability of business operations. This data is then used to prepare future plans and frame policies to execute financial plans. Thanks

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