The Accounting Cycle
As fun as it gets
Step 1- Analayzing Transactions & Journalizing
The first step to completing the accounting cycle all starts with recognizing what type of transaction you're dealing with. Transactions can involve checks, memorandums, and other source documents to aid you in your mission to successfully analyze the transaction. After you analyze the transaction, you simply journalize it into the general journal. The general journal has two parts: debit and credit. You break down the transaction into the debit and credit parts. It's a very simple process that is complicated to explain
Step 2- Posting
After journalizing the transaction into debit and credit parts, you then copy and paste them into their own ledger. A ledger is a place to record debits and credits for a specific account, that will come in handy down the road.
Step 4- Preparing Financial Statements
Using the balances from the work sheet above, you then prepare a financial statement (that shows revenue and expenses) and a balance sheet (that includes all other accounts).
Step 5- Journalizing Adjusting and Closing Entries
First off, when journalizing adjusting entries you are journalizing the adjustments from the previous steps. On the other hand, journalizing closing entries is essentially closing temporary accounts.
Step 6- Post Adjusting and Closing Entries
Step 6 goes hand in hand with step 5. When you're posting these entries, you are simply copying and pasting the adjusting and closing entries, from above, into their respective ledger accounts.
Step 7- Preparing Post-Closing Trial Balance
The final step is the simplest of them all. When you create a post closing trial balance, you simply list accounts to make sure your debits equal your credits.