Accounting Cycle

Question 1

1. Analyze transactions

Answer 1

Identify all accounting events to determine the impact of each transaction. These include sales of goods or services, purchases, refunds, debt payments, and so on.

Question 2

2. Record transactions in a journal

Answer 2

Record transactions as debits and credits in the appropriate accounting journal. Debits and credits must remain balanced.

Question 3

3. Post transactions to the general ledger

Answer 3

Post journal entries to the appropriate accounts in the general ledger.

Question 4

4. Prepare a trial balance

Answer 4

At the end of the accounting period, total the debits and credits from the general ledger to make sure they are balanced.

Question 5

5. Journalize and post adjusting entries

Answer 5

Adjusting entries are made to correct any errors or match income and expenses when using the accrual method of accounting.

Question 6

6. Prepare an adjusted trial balance

Answer 6

Total the adjusted entries to make sure the debits and credits are balanced.

Question 7

7. Prepare financial statements

Answer 7

Use the adjusted trial balance to prepare financial statements

Question 8

8. Journalize and post closing entries

Answer 8

“Close your books” by moving balances from temporary accounts to permanent accounts.

Question 9

9. Prepare post-closing trial balance

Answer 9

Make sure the debits and credits are balanced in the permanent accounts.