The Accounting Cycle is a sequence of procedures used to record, classify and summarize and processing accounting information to generate financial statements, on a regular basis. The accounting cycle during each period starts from recording individual transactions in the books of accounting and ends at the preparation of financial statements and closing processes.
Steps in the Accounting Cycle
–Capture and Record business activities.
Identify and analyze transactions that need to be recorded, journalize (record) the transactions in the proper journal.
–Classify transactions into appropriate Accounts.
Post from the journals to the General Ledger and Subsidiary Ledgers.
–Prepare an unadjusted Trial Balance
Enter Trial Balance Information from General Ledger
–Make adjusting entries at the end of the period
Review accounts and other information to determine if any Adjusting Entries are necessary
–Prepare an Adjusted Trial Balance.
This is a Trial Balance after adjusting entries have been made.
–Prepare final accounts
Summarize and Report the balances of Ledger Accounts in financial statements.
–Journalize and post closingentries
Record our closing Entries in our General Journal Post our entries from our General Journal to our General Ledger.
–Prepare a Closing Trial Balance
The Accounting Cycle