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!


Steps:

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