The Accounting Cycle

The 8 Step Guide To Accounting

Steps 1 and 2 of the accounting cycle.

Analyzing transactions journalizing and posting the workbook are the few beginning steps in the accounting cycle. To being with, the first two steps of the accounting cycle go hand and hand. When you analyze your transactions you are taking the money gained in a certain amount of time and journalizing it to keep records of the money that you earned and spent.

3rd step in the accounting cycle is posting transactions.

The transactions are posted to the account that it impacts. A few examples of the accounts that are effected are : Cash, Capital, Accounts payable etc... These accounts are part of the General Ledger, where you can find a summary of the business’s accounts.

Preparing a work sheet, 4th step in accounting.

Usually, your first assessment of the trial balance shows that the journals aren’t in balance.

Adjustments are made to change the balance of assets and to adjust for one-time payments (such as supplies) that should be renewed on a monthly basis to more accurately match monthly expenses with monthly revenues. After you record adjustments, you create another trial balance to see if the accounts effected are now in balance.

5th step in the accounting cycle, Financial statements.

You prepare the balance sheet and income statement using the data of the corrected account balances.

6th step in the accounting cycle, Journalizing Adjusting and Closing Entries.

You are recording what adjustments you made and all of the accounts that you need to set to a zero balance.

7th step in the accounting cycle, Posting Adjusting and Closing Entries.

You post any corrections needed to the studied accounts once your trial balance shows the accounts will be balanced when the adjustments needed are made.

The last step to accounting, Preparing a post closing trial balance.

You close the books for the revenue and expense accounts and begin the entire cycle again with zero balances in those accounts