Accounting Cycle

Business transactions occur impacting the organization

Step one: measure

During the period

review GAAP to see how and when transaction is recorded

Step two: measure

During the period

Select impacted accounts from "Chart of Accounts"

Step 3: measure

during the period

Record journal entries during the accounting period

Step 4: measure

During the period

Post and aggregate the journal entries to the general ledger accounts

Step 5: aggregate

During the period

Prepare the unadjusted trial balance

Step 6: aggregate

During the period

record the adjusting journal entries at the end of the accounting period

Step 7: measure

During the period

Post and aggregate the adjusting journal entries to the general ledger accounts

Step 8: aggregate

End of period

Prepare the adjusted trial balance

Step 9: aggregate

End of period

Prepare financial statements based on ending account balances in the adjusted trial balance

Step 10: communicate

End of period

Income Statement

Step 10a: communication

End of period

Statement of Stockholders Equity

Step 10b: communication

End of period

Balance Sheet

Step 10c: communication

End of period

Statement of Cash Flows

Step 10d: communication

End of period

Record "closing" journal entries to close temporary accounts (revenues, expenses, dividends)

Step 11: communication

End of period