Accounting Cycle

Ben Gohn

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The Office Webisodes - The Accountants - #1 The Books Don't Balance

First Step: Analyze Transactions

To help analyze transactions; T charts help to show the debits and credits of each transaction.

Second Step: Journalize

Record transactions into a General Journal

Third Step: Posting

Posting is where the general ledger Is updated with the different accounts.

Fourth Step: Prepare a Worksheet

This is a summary of the of the journal and shows adjustments made.

Fifth Step: Prepare Financial Statements

The financial statement shows that the accounting equation, Assets= Liabilities + Owner's Equity, is in balance.

Sixth Step: Journalize Adjusting and Closing Entries

This is the end of the accounting cycle where the accounts get ready for the next cycle to close out non-permanent accounts.

Seventh Step: Post Adjusting and Closing Entries

Posting the closed accounts should get the income summary to zero and reset the balance for the non-permanent accounts.

Last Step: Prepare Post-Closing Trial Balance

This is a summary showing all the accounts have transitioned over to a new cycle.