the amazing accounting cycle
by myles richardson
step 1: Analyzes transactions
Financial transactions star the cycle. this includes paying debts and sharing assets and also keeping track of money.
step 2: journalize
When journalizing an accountant it applies to double entry accounting. the debit always has to equal the credit column.
step 3: posting
This is when you transfer the information from a journal entry to a ledger account. Also transferring debits and credits to the ledger.
step 4: prepare work sheet
This is a columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
step 5: prepare financial statements
These are financial reports that summarize the financial conditions and operations of a business.
step 6: jourlalize adjusting and closing entries
You post any corrections needed to the affected accounts once your trial balance shows the accounts will be balanced once the adjustments needed are made to the accounts. Don't need to make adjusting entries until the trial balance step is finished.
step 7: post adjusting and closing entries
You prepare the balance sheet and income statement using the corrected account balances for the next step in the cycle.
step 8: prepare post-closing trial balance
Preparing the accountants for recording transactions and event for the next period the accounts are getting books ready for the next year. Revenue and expense accounts and begin the entire cycle again with zero balances in those accounts.