Accounting cycle is the basically the processes where the bookkeepers will strive to complete within each accounting period’s deadline/timeline. Hence, what’s in the accounting cycle must be fully grasped and executed.
Append below is what we usually called the usual steps involved in the Accounting Cycle. This Accounting cycle is always repeating itself. When we closed an accounting cycle, another cycle is repeating.
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WHAT IS AN ACCOUNTING CYCLE? |
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Accounting Cycle is a series of accounting process which begins with : The identification of an economic activity or transaction, Recording of the economic activity and ends with: The preparation of the financial statements. |
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THE STEPS INVOLVE IN AN ACCOUNTING CYCLE ARE: |
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Analyse source documents like invoices, receipts, payment vouchers, etc |
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Record transactions in Journals ( sales journal, purchase journals,etc) |
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Post to ledger accounts |
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Prepare Unadjusted Trial Balance |
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Journalize adjusting entries |
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Post adjusting entries |
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Prepare Adjusted Trial Balance |
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Journalize closing entries |
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Post closing entries |
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Prepare post-closing Trial Balance |
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Prepare financial statements like the Income Statement and the Balance Sheet |
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