Accounting Cycle Paper Running head: Accounting Cycle Paper

Accounting Cycle Paper Suzy Bell University of Phoenix Intermediate Financial Accounting One ACC421 Jeffery T. Albus July 04, 2011

Accounting Cycle Paper This main point for this paper is the accounting cycle at Wal-Mart. A brief summary of the Wal-Mart Corporation needs mentioning first for a better understanding. Then the next part of the paper reviews and explains part of the accounting cycle for Wal-Mart. Last, to provide a description of the people, processes, and the systems that one deems essential to the accounting cycle needs mentioning in the paper. Wal-Mart has a mission statement that says helping people save money so they can live better. The vision for Wal-Mart seems clear enough they focus on particular areas where they head up the industry that reflects on the distinctiveness for the organization. For Wal-Mart low prices proves the long-term goal of this organization. For years this mantra works for Wal-Mart; one knows this because Wal-Mart is the number one retailing store in the United States. This is an American public organization running a large chain of discount department stores. Sam Walton founded Wal-Mart in 1962 and to this day a member of the family sits on the Board of directors. In the world of business every organization uses accounting cycles in recording transactions and when one prepares the financial statements. For these purposes eight basic steps need using to prepare a financial statement: (1) identifying and measuring transactions and other events; (2) journalizing; (3) posting; (4) preparing an unadjusted trial balance; (5) making adjusting entries; (6) preparing an adjusted trial balance; (7) preparing financial statements; and (8) closing (Kieso, Weygandt & Warfield, 2007, p. 93). The first step in the accounting cycle is analysis of transactions and selected other events (Kieso, Weygandt & Warfield, 2007, p. 93).

The accounting functions of an organizations main objectives consist of processing information and preparing financial statements for the end of the organizations accounting period. Wal-Mart as other companies systematically process financial information, and the staff prepares the financial statements on a monthly, quarterly, and on an annual basis. A series of steps needs achieving to meet the primary objectives. The steps of the cycle: (1) to collect and analyze data from transactions and event; (2) then to journalize transactions; (3) posting to the general ledger. Wal-Mart follows these steps, but in researching found that Wal-Mart has a habit of using non-Generally Accepted Accounting Principles financial measures for presenting information to the press. Wal-Mart uses the accrual method for the accounting process and maintains a perpetual inventory system for the stock carried for the financial reporting and tax purposes. Because under perpetual inventory system, the cost of a quantity of goods sold or purchased is always recorded at the time of sale or purchase (Doc Share, LLC, 2011). Because of this Wal-Mart constantly performs physical inventories so as to confirm the accuracy of the inventory stated on the books, and makes adjustments in the books to reconcile the book inventory to the physical inventory. This technique used by Wal-Mart refers to the cycle counting. The cycle counting is necessary because of the difficulty in conducting physical inventory at each store the last day of the year. The technique will provide management with feedback on the effectiveness for the inventory management and facilitates the use of experienced personnel that conduct these physical inventories. Wal-Mart internal audit department sends stores a preparation package that includes instructions on how to prepare the physical count. The physical count needed conducting by a team of independent counters (18 to 40 persons), and the representatives from Wal-Marts loss prevention department (one to two persons), internal audit department (one to

three persons) and operations division (one to two persons). Then Wal-Marts independent auditors Ernst, and Young, sent representatives randomly to selected physical counts so one could test the accuracy of the stores counts. These independent auditors need to count every inventory item. The results from this physical count became reconciled with the book inventory. Then Wal-Marts internal audit department reconciles the books and the next month records the results from the physical inventory (Find Law, 2003). This audit reaches only one aspect of the way Wal-Mart does the accounting cycle. In conclusion, the main point for the paper is the accounting cycle at Wal-Mart. A brief summary of the Wal-Mart Corporation needed mentioning first for a better understanding. Then the next part of the paper reviews and explains part of the accounting cycle for Wal-Mart because Wal-Mart is too vast to know every detail for the accounting cycle. Last, to provide a description of the people, processes, and the systems that one deems essential to the accounting cycle needs mentioning in the paper.

References DocShare, LLC (2011). Inventory Accounting at Wal-Mart Stores. Retrieved July 4, 2011, from http://www.docshare.com/doc/119569/Inventory-Accounting-at-Wal-Mart-Stores FindLaw (2003). U.S. 8the Circut Court of Appeals Wal-Mart Stores v Cir. Retrieved July 4, 2011, from http://caselaw.lp.findlaw.com/scripts/getcase.pl? navby=search&case=/data2/circs/8th/972693p.html&friend=nytimes Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). The Accounting Information System. In Intermediate Accounting (pp. 61-124). : John Wiley & Sons.