The Eight Steps of Accounting
Read Through to Learn About The Accounting Cycle
List all transactions in the journal. Make sure the journal is in chronological order. This is the first place all the transactions are listed
Post each transaction to the account in which the transaction effects. The information that is received from the general journal must be transferred over to the general ledger.
Prepare Work Sheet
The next step is preparing a work sheet. This work sheet is used to record the trial balances of the accounts.
Prepare Financial Statements
The step after preparing the worksheet is to prepare financial statements. These financial statements are important because it will show a business if they had a net income, or a net loss
Journalize Adjusting and Closing Entries
Then journalizing the adjusting and closing entries takes place. The adjusting entries record any change made to an account during the fiscal period. The closing entries close accounts for the end of the fiscal period.
Post Adjusting and Closing Entries
After journalizing the adjusting and closing entries, the next step would be to post the adjusting and closing entries.
Prepare Post-Closing Trial Balance
After the closing entries are posted, only permanent accounts remain open. A post-closing trial balance is used to check the accuracy of these accounts.