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