The Accounting Cycle-Steps Involved

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 prepration of the financial statements. The Accounting Cycle is a repeated process where one cycle ends and another cycle (as above) is repeated again

The steps involve in the Accounting Cycle:

• Analyse source documents like invoices, receipts, payment vouchers, etc
• Record transactions in Journals ( sales journal, purchase journals,etc)
• Post to ledger accounts
• Prepare Unadjusted Trial Balance
• Journalize adjusting entries
• Post adjusting entries
• Prepare Adjusted Trial Balance
• Journalize closing entries
• Post closing entries
• Prepare post-closing Trial Balance
• Prepare financial statements like the Income Statement