The Accounting Cycle

The Eight steps of Accounting

The eight steps include:

1. Analyze transactions

2. Journalize

3. Post

4. Prepare work sheet

5. Prepare financial statements

6. Journalize adjusting and closing entries

8. Prepare post-closing trial balance

Analyze Transactions

This is the changing of assets (things owned by a business), liabilities (amounts owed by a business), and owner's equity (the amount remaining when the value of liabilities is subtracted from the value of assets). The accounting equation is an easy way to analyze transactions, Assets=Liabilities+Owner's Equity.


This is the entering of financial data, mainly a specific transaction in a general journal under double entry accounts.


Posting is the process in which debits and credit amounts are transferred from the general journal to the ledger.

1. Write the date in the ledger

2. Write the journal number in the post reference column of the ledger.

3. Write the debit and credit amounts in the ledger.

4. Write the new balance for the debit and credit columns.

5. write the ledger account number in the post reference column of the general journal.

Preparing a worksheet

A worksheet is a ledger sheet that lists all of the accounts and their balances that are used in a business on a certain date. The worksheet is used at the end of an accounting period, and is used to make adjustments to accounting entries, closing entries, and to prepare financial statements.
Accountacy - Introduction to Accounting

Prepare financial statements

A written report of the financial condition of a firm. Financial statements include the balance sheet, income statement, statement of changes in net worth and statement of cash flow.

Journalizing adjusting and closing entries

adjusting entries are journal entries recorded to update ledger accounts at the end of a fiscal period while closing entries are journal entries used to prepare temporary accounts for a new fiscal period.

Preparing a post-closing trial balance

This is the listing of all of the accounts in the general ledger with account balances after the closing entries have been posted. This means that the listing would consist of only the balance sheet accounts with balances. The income statement accounts would not be listed because they are temporary accounts whose balances have been closed to the owner's capital account.
Accounting Songs

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