Accounting Cyle: What is it?

A process of recording transactions of a company.

Eight Steps to this Process

Starts with a transaction, ends with a financial statement.

Step 1: Analyze the Transaction

Source Document-- An original record containing the details used to post in a general ledger.

Examples include: Memorandum, Receipts, Sales Invoices, Checks, Calculator Tapes.

Step 2: Journalizing

Journalizing-- the act of recording transactions into a journal.


A. Write the date in the Date Column.

B. Write the title of the account debited. Then, write on one column just below as a credit.

C. Write the debited and credited amounts of that transaction.

D. Write the source document number in the Doc. No. column for both debited and credited accounts.

Step 3: Posting

From a General Journal to a General Ledger

1. Write the date in the date column.

2 Write the journal page number (Ex.- G1) in the Post Red. of the account.

3. Copy the accounts, and post the accounts in their designated ledger account.

(3.If cash is debited, post the cash into the ledger as a debit, and place on the balance column as a credit. Vice versa with credit accounts.)

4. Calculate the new balance in the ledger.

5. Record the account number, in the Post Ref. column of the journal.

Step 4: Prepare a Work Sheet

Step 5: Prepare Financial Statements

6: Journalize Adjusting and Closing Entries

Steps 7 & 8: Post Adjusting and Closing Entries & Prepare a Post Closing Trial Balance