The Accounting Cycle

Analyze Transactions

The process of examining and identifying all financial transactions that have occurred during a specific period.

Record Transactions

The act of documenting financial transactions in a journal or ledger with details such as date, accounts involved, and amount.

Post Transactions

Transferring recorded transactions from the journal to the general ledger, which consolidates all financial transactions and account balances.

Trial Balance

A report generated at the end of an accounting period to ensure that the total debits and credits in the ledger are equal.

Adjust Entries

Changes made to ensure that accounts accurately reflect the financial position, including entries for accrued expenses and depreciation.

Adjusted Trial Balance

A new trial balance created after adjusting entries are made to confirm all accounts are properly adjusted.

Financial Statements

Reports prepared using information from the ledger and adjusted trial balance, including the income statement, balance sheet, and statement of cash flows.

Closing Entries

Entries made at the end of the period to reset the balances of temporary accounts to zero, including revenue, expenses, and dividends.

Post Closing Trial Balance

A final trial balance created after making closing entries to ensure all accounts are properly balanced.