The Accounting Cycle
The 8 Steps of the Accounting Cycle
1. Analyzing Transactions- This is where accountants look at transactions and figure out the debits and credits.
2. Journalizing- This is where the amounts get recorded in the general journal.
3. Posting- The amounts from the journal get posted to the general ledger.
4. Preparing Work Sheet- Income statement columns must equal the total of the balance sheet columns.
5. Preparing Financial Statements- In order to prepare financial statements, you must record the values in the income statement and balance sheets.
6. Journalizing Adjusting and Closing Entries- The adjusting and closing entries are recorded in the general journal.
7. Posting Adjusting and Closing Entries- The adjusting and closing entries from the general journal are posted into the general ledger.
8. Preparing Post-Closing Trial Balance- The assets must equal the liabilities + owner's equity when finished.