Accounting Cycle
Ben Gohn
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.