The Accounting Cycle
The 8 basic steps to running a smooth business
The 8 Accounting Steps
The accounting balance must always remain equal! All transactions must be recorded!
1. Analyze Transactions- Analyze each transaction between ever company that you may have accounts open with or have done business with.
2. Journalize- Place all transactions in a General Journal
3. Posting- Post all these recorded transactions to the General Ledger
4. Prepare your Worksheet- This is a "trial" for all your accounts and sums of accounts. Enter in your balances to a trial-balance sheet, and an adjusted trial-balance
5. Prepare a Finance Statement- A general record of any financial statements, or assets your business might hold
6. Journalize Adjusting and Closing Entries- Closing entries are journal entries that end based on the accounting period. Transfer from temporary accounts to a permanent accounts
7.Post Adjusting and Closing Entries- Adjusting the Closing entries return all accounts to owners equity for a clean financial period
8. Prepare Posting-Closing Trial Balance- Post-closing shows all transactions, and the adjustments made over the 8 step cycle
Trial Balance Sheets
Keeps all assets and accounts numbers in one area to adjust.
Shows the final numbers.
Keeps the accounts in line