March 2, 2014
The accounting cycle is an important part of the financial accounting system for an organization to maintain an organized record of transactions and to report the company’s financial status. “The accounting cycle is a methodical set of rules to ensure the accuracy and conformity of financial statements” (Investopedia, 2015). Publicly traded corporations are required to report accurate and informed financial information through the Financial Accounting Standards Board (FASB) and the Security Exchange Commission (SEC). The corporations utilize the accounting cycle to ensure the financial statements provided to the public follow the Generally Accepted Accounting Principles (GAAP), and accurately inform investors and creditors of their financial status. This paper reviews the purpose of accounting and financial reporting of Anthem Blue Cross and Blue Shield, and how the company uses the accounting cycle to report the financial status of the organization.
In larger corporations, the first steps of the accounting cycle are reported up to each division of the organization and are then combined to report the financials of the entire organization. Anthem Blue Cross and Blue Shield is a large nationally based company with separate divisions across the country. Each division has its own accounting department that reports to the head accounting department of the organization so that the information is combined into one financial report for the organization. The accounting team of each division are tasked with identifying the transactions that need recorded and logging the transactions into a journal. The journal records the date of the transaction, type of transaction, amount of the transaction, and whether it was a debit or credit. The team then posts the journal entries into a general ledger where they reference the journal entries to ensure accuracy. “The purpose of...