The Accounting Cycle
Describes the basic accounting cycle in steps.
Terms
undefined, object
copy deck
- Step 8
- Financial Statements are prepared in the following order: Income Statement, Statement of Owner's Equity, Balance Sheet.
- Step 2
- Transactions are posted to the Ledger.
- Step 7
- An Adjusted Trial Balance is prepared.
- Step 6
- Adjusting entries are Journalized and posted to the Ledger.
- Step 10
- A post-closing trial balance is prepared.
- Step 1
- Transactions are analyzed and recorded in the Journal. Remember, in order to be recorded, a transaction must effect at least two accounts.
- Step 3
- An Unadjusted Trial Balance is prepared. Remember, the totals of the credit and debit columns should be equal.
- Step 4
- Adjustment Data are assembled and analyzed. Remember, even if the UTB debit & credit columns are equal, there may still be errors and some accounts may need adjusting, regardless.
- Step 9
- Closing entries are Journalized and posted to the Ledger as follows: 1) Revenues & Expenses are closed to the Income Summary Account 2) The Income Summary Account is closed the Owner's Capital Account 3) The Owner's Drawing Account is closed to the Owner's Capital Account.
- Step 5
- Optional end-of-period spreadsheet may be prepared. You may find this worksheet helpful in the next steps.