Nine Step Accounting Cycle

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Nine Step Accounting Cycle XACC 280 June 21, 2013 Mary Currie Nine Step Accounting Cycle The logical sequence of procedures used to prepare financial statements and record transactions are known as the accounting cycle; used by businesses. The accounting cycle is repeated each reporting period, beginning with the transactions and ending with the closing of books. There are nine steps in the accounting cycle they are as follows: * Analyze Transactions – This is completed on a daily basis. In order to complete this step you must identify the account by classifying the transactions by Credit or Debit. * Journalize Transactions – Part of the transaction process, transaction data is entered on the J1 page of the General Journal. * Post to Ledger Accounts – This is used to transfer the journal entries to the ledger accounts; providing balances in various accounts. * Prepare a Trial Balance – Credits and Debits are totaled in order to determine equity before adjustments. The account balances and titles are listed in the order as they appear in the ledger. * Journalize and Post Adjusting Entries – On page J2 of the General Journal expenses incurred and revenues earned, not recorded on daily entries, are recorded. * Prepare an Adjusted Trial Balance – All the account balances are entered to generate financial statements; providing the equity of the total Credits and Debits after all the adjustments are made. * Prepare Financial Statements – This step can be prepared by using the adjusted trial balance 10 column worksheet and can be done periodically, monthly, quarterly, or annually. * Journalize and Post Closing Entries – After this step all temporary accounts will have zero balances and is recorded on page J3 of the General Journal. This step can be done annually. * Prepare a Post Closing Trial Balance – The permanent accounts

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