The Accounting Cylce

8 Steps for Easy Accounting

Step 1

Gather up all financial transactions that involve changing your assets, adding or subtracting money to the owner's of the company, or paying off or establishing a debt.

Step 2

In chronological order, place each transaction in the appropriate journal.

Step 3

Place all of the transactions into the general ledger in the correct account.

Step 4

Next, is to prepare a worksheet. It is also known as an extended trial balance. It helps understand what adjustments are made, what accounts are affected and by what amount.

Step 5

Create and Income statement and a balance sheet for all of the corrections that were previously made on the worksheet.

Step 6

This is where you adjust and close the journal entries for the past fiscal period. Temporary accounts are set to zero and permanent accounts just accumulate into the next period.

Step 7

Now, you are able to take those journal entries that were just adjusted, and post them into the general ledger.

Step 8

After everything has been completed, your last step is to create another trial balance just to make sure your debits and your credits are equal.