The Accounting Cycle - 1035 Words

The Accounting Cycle Presented to Ms. Aisha Meeks Department of Business Management College of Business Administration Alabama State University In Partial Fulfillment of the Requirements for the Course ACT.214.04 By Krystal Hall January 26, 2013 Memo: To: Ms. Aisha Meeks From: Krystal Hall Date: 2/26/2013 Re: The Accounting Cycle Every company has an accounting cycle. An Accounting cycle is the process that begins with analyzing and journalizing transactions and it ends with the post-closing trial balance. When preparing the accounting cycles there are ten steps that are included. They are as follow; transactions are analyzed and recorded in the journal, posted to the ledger, an unadjusted trial balance is†¦show more content†¦Journalized and Posting Adjusting Entries Then, adjusting entries are journalized and posted to the ledger. At the end of the accounting period the adjusting entries appearing in the work sheet are recorded in the journal and posted to the ledger; bringing the ledger into agreement with the data reported on the profit and loss account and balance sheet. The adjusting entries are dated as on the last day of the accounting period, even though they are usually recorded some time later Preparing an Adjusting Trial Balance The next step involves an adjusting trial balance being prep ared. The adjusted trial balance is prepared to verify the equality of the total of the debit and credit balances. This is the last step before preparing the financial statements. If the adjusted trial balance does not balance, an error had occurred and must be found and corrected. Preparing the Financial Statements The financial statements are then prepared. The financial statement is the most important outcome of the account cycle. In this process the income statement is prepared first, followed by the statement of owner’s equity, and then the balance sheet. The statement can be prepared directly from the adjusted trial balance, the end-of-period spreadsheet, or the ledger. The net income or net loss shown on the income statement is reported on the statement ofShow MoreRelatedThe Accounting Cycle1405 Words   |  6 PagesThe accounting cycle is the process by which companies produce their financial statements for a specific period of time. It consists of ten steps, each st ep depending on the information generated in the previous step. Any business that fails to follow the steps of the accounting cycle, or omits any piece of vital information, risks ending up lost in a wave of inaccurate numbers or accounts that don’t balance correctly. 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