Nine Steps of the Accounting Cycle

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Nine Steps of the Accounting Cycle XACC/280 06/05/2011 A complete acconting cycle implies nine steps that represent the entire process. The accounting process nine stes are: 1- Analizing all business transactions. Entitles the analizing and organization of all transactions of the business utilizing the debit and credit effect – assets and liabilities. 2- Journilizing the transactions. Process that consists of documenting in a journal the informationgathered from all transactions. This information must include the date of the transaction, the accounts and amounts to be debited and credited, and a brief explanation of the transaction. 3- Post to ledger accounts. This process is the transfering the journal entries into a ledger account. 4- Prepare trail balance. A trial balance is a list of accounts and their balances at a given time. The main purpose of the trail balance is to check that the debits and credits are equal amounts at the end of posting. This means that both amounts should be the same figure. 5- Jurnilize and post adjusting entries: prepaiment/accruals. This step consists of closing the trial balance and closing it at the end of the accounting period, Which accoumulated the entries or the period figures in preparation for the accounting of a whole fiscal year. 6- Prepare an adjusted trial balance. An adjusted trial balance is a listing of all the account titles and balances contained in the general ledger after the adjusting entries for an accounting period have been posted to the accounts. 7- Prepare financial statements; income statements, retained earnings statements, balannce sheets. Financial staments, income statements, retained earning statements and balance sheets are prepared to report the bottom line, year end (fiscal) earnings and financial standing to investors and company owners.

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