The Process of Accounting (Accounting Cycle)

1.) Vertical Depiction of Activities

Timeframe Accounting Activity

1. Business transactions occur impacting the organization
2. Review GAAP to see how and when transaction is recorded Measure
During the 3. Select impacted accounts from “Chart of Accounts”
period 4. Record journal entries during the Accounting Period
Activities 5. Post and aggregate the journal entries to the general ledger accounts
6. Prepare the Unadjusted Trial Balance Aggregate
7. Record the “adjusting” journal entries at the end of the Accounting Period Measure
8. Post and aggregate the adjusting journal entries to the general ledger
accounts Aggregate
9. Prepare the Adjusted Trial Balance
10. Prepare financial statements based on ending account balances in the
End of Adjusted Trial Balance
Period a. Income Statement
Activities b. Statement of Stockholders’ Equity Communicate
c. Balance Sheet
d. Statement of Cash Flows
11. Record “closing” journal entries to close temporary accounts (Revenues,
Expenses, Dividends)

2.) The more typical Accounting Cycle from numbered activities above