For hundreds of years, accounting has been performed the same way. There are ten steps to get to the end result, a financial statement that balances. Technology is becoming an ever-more important part of accounting today. The above process needs to be updated to better serve those who use it. Instead of thinking of automation as just transferring all the steps into a computer, there needs to be a shift in thinking.
As mentioned earlier, there are many steps in the accounting cycle and one of those steps will be discussed here, step ten, reversing journal entries. This is done to “reverse adjusting entries made at the end of one period and prepare the accounting records for normal processing of business events in the new period. (Moscove, Simkin, and Bagranoff, 2003, p.94) A Journal can be defined as “a chronological listing of the firm’s transactions, including the amounts, accounts that are affected, and in which direction the accounts are affected.” (Journal Entries, ¶ 1) Journal entries are recorded in the “journal” as a debit and a credit. Debit and credits must balance. A journal entry would be made when cash that cannot be applied to any accounting module, such as accounts receivable, accounts payable, or payroll, has to be reflected in the general ledger.
At Bravo Underground, Inc. journal entries are made manually. For example, expenses and labor are expensed in the month of January for a receivable. The receivable is actually going to be credited into the month of February. In this case one would need to reverse the January entries and put them in February’s accounting date. This occurs because the receivable has a February accounting date and the expenses have to balance. This takes a lot of time and incr ...