Accounting Cycle

Learn the simple steps to the accounting cycle. By: Josh K.

Step 1. Analyzes transactions

Analyze and recording transactions from the journal entries.

Step 2. Journalize

Transactions are then listed in the accounting journal in the appropriate section.

Step 3. Post

After, transactions are then posted into the account that it impacts. These accounts are also part of the general ledger.

Step 4. Prepare a work sheet

A work sheet is then prepared by imputing the balances from each account.

Step 5. Prepare financial statements

You prepare the balance sheet and income statement using the correct account balances.

Step 6. Journalize adjusting and closing entries

Take the information from the work sheet and add in adjusting temporary accounts and permanent accounts.

Step 7. Post adjusting and closing entries

After you journalize take the information add it to the general ledger.

Step 8. Prepare post-closing trial balance

At the end of the accounting period( which could be a month, quarter, or year) a business prepares a trial balance.