The accounting cycle

By Cole Rutledge

Accounting cycle

This is the accounting cycle in wheel form.

Questions

some questions that are asked are what are the 8 steps? Well they are...

1. Analyzes transactions

2. Journalize

3. Post

4. Prepare a work sheet

5. Prepare financial statements

6. Journalize adjusting and closing entries

7. Post adjusting and closing entries

8. Prepare post-closing trial balance

step1: Analyzes Transactions

Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves the exchange of the company’s assets, the establishment or payoff of a debt, or the deposit from or payout of money to the company’s owners.

step2: Journalize

The journal is also known as the “book of original entry” and is the first place a transaction is listed.

step3: Post

These accounts are part of the General Ledger, where you can find a summary of all the business’s accounts.

step4: Prepare a work sheet

At the end of a accounting period you make calculations.

step5: Prepare finacial statements

Adjustments are made to show change in a company's business.

step6: Journalizing adjusting and closing entries.

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

step7: Post adjusting and closing entries.

Prepare the balance sheet and the income statement and use the correct accounts.

step8: Prepare a post closing trial balance.

As a business man you close your books every month to see how much money you ether made or lost. This is very important because if you don't do this your business could fall.