Accounting is an organizational tool that is used in decision making. To know what should be done to better the decision-making process, the accuracy is the accounting process should be analyzed. The accuracy of accounting is based on proper accounting methods; this is done by first getting the proper information of the financial statements. At the beginning of this unit, we discussed how to create and report 5financial statements. Financial statements include balance sheets, income accounts, cash flow accounts and equity accounts this documents help in making judgment calls. Errors in the financial statements may cause failure in the evaluation of the financial position of the company. Reduction of mistakes may be established by the proper recording of the different transaction that the business is doing on a daily basis. There are tools that one uses to record financial statements the two methods are cash basis and accrual basis. The article will look into the various recording approaches their advantages to the company and how best they are used. It will also look into the accounting cycle from the first step to the last and how these steps have a major impact in the interpretation of financial statements. Adjusting Entries To make good, accurate decisions the company will use the services of an accountant, an accountant can make financial statements give proper information as to what decisions will be more favorable for an individual company. In order to make a profit, two approaches are available for this; they include 4cash basis and accrual basis. In cash basis cash is recorded when one pays and receives money, it is the right approach when dealing with small companies. Accrual basis is used when dealing with growing and large corporations, 1revenue is recorded when it is earned, and expenses are recorded when they are consumed. The major difference between this two recording basis is the timing; recognition of revenue is not done until the customer has paid and recognition of expense is not recognized until the company has paid the supplier this is cash basis. In accrual basis, the transactions are recorded when they immediately occur, this is the best method to use since it gives the real time financial position of the company. The timing of the recordings may result in difference in balances this condition is best remedied by taking stock of all transactions and knowing which ones make the deviation from cash basis and accrual basis. Cash basis may be suitable for small enterprises but accrual basis is much better for large corporations that are growing, and it allows the company to see where they are. Cash basis is good when one can see what amount of money they have and what they are owed under the accrual there is a lot of uncertainty and judgment that may cause a lot of mistakes or bad evaluation of the amount of the money that they will receive in cash terms. In large companies where they have suppliers and large-scale manufacturing of goods and services, the accrued basis may be better to record what they have sold and spent in real time. If they would not use this approach, the companies may lose a lot of money waiting to be paid on a cash basis to know what they have sold. Accrual basis is also used when filing tax returns; it is used since the tax is cut when it gives the current state of the company and the government can measure how much tax the company should pay without looking at the creditors that owe the business money. The Closing Process and the Classified Balance Sheet The closing process is the activity that is undertaken at the end of a financial year and before the beginning of a new fiscal year. It is done to check the accuracy of the financial statements, general ledgers, and account statements are compared to make sure that the company has all their records in proper condition to create the ending year balance sheet that will tell the company how much they have grown over a particular year. The classified assessment is a document of financial position that is created at the end of the year. It includes all the transactions that have been performed by a company all throughout the year in the separate journal and have been moved to the general ledger, and the final balance has been posted at the bottom. A trial balance is then created, and the items are carefully analyzedand moved to their individual financial statements; it is paramount to make sure that the trial balance is accurate since it is the primary tool in the creation of the final assessment of the company. The closing process has three main 2goals the first is to lock in revenue and expenses; the second is to reset receipts and expenditures account to zero, and the third is to update the owner’s equity in the business. 3Accomplishing these goals is done by a step by step process which starts with the creation of the adjusted trial balance; the general ledger is used to calculate the revenue accounts and expenses accounts which are closed off in this ledger. The difference between the income and the expenditure shows the net profit or net loss that the company has incurred then this value is adjusted with the owner's equity account. Withdrawal is the last item posted in the general ledger and is deducted, or the owner's equity account and them the balance is calculated at the bottom, and after that, the post-closing trial balance is created. These processes are part of a bigger process known as the accounting cycle which starts with analyzing transactions, journalizing, posting in the ledger, preparation of 1the unadjusted trial balance, adjusting it, preparation of the trial balance, preparation of statements, closing the statements and preparation of the post-closing trial balance. In conclusion, the balance sheet is a very useful tool in an organization; classification on the statement enables the accountant or any other stakeholder to know the picture of the company as it is at the time. Classification of the balance sheet under the current liabilities and assets enables the company to be able to weigh their options on a more short-term basis while classification under long-term liabilities and assets allow the stakeholder to know what their obligations are in a wider time span. The usefulness of this data is to be able to know what a company may do to stay afloat and continue to be profitable while putting into consideration the various factors they have to pay off for the specified duration of time. The stakeholders will also look into the income statements to know how much more the company is making in a given period and how they can project future performance of the business. Finally, this article was created to show the many advantages of financial statements to the manager and the value an accountant has to the growth of a company. The article will also show the importance of proper recording of transactions have on the final balance sheet and the weight it may have to know whether a company is making money or not.