 The Accounting Cycle is a

series of steps.
 Starts with making
accounting entries for each
transaction and goes
through closing the books.
 DEFINITION

 The accounting cycle refers

to nine steps, repeated in
each reporting periods, to
verify transactions and
prepare financial
statements for internal and
external users.
 These 9 types are:
 Analyze
 Journalize
 Post A Business Transaction
 Adjusted Trial Balance
 Adjusting
 Preparing
 Preparing Financial Statement
 Closing the Account
 Post Closing Trial Balance
 Analyze

 The first step of accounting

cycle.
 First analyze a transaction and
its source documents
 Apply double-entry accounting
to recognize its effect on
account balances.
 2. Journalize
 Transaction are recorded in a
General Journal.
 Journalizing leaves a record of
all transaction in one
document.
 Helping to prevent mistakes
and linking the debits and
credits for each transaction.
 3. Post A Business Transaction
 The third step in the accounting cycle is
posting
 Also known as LEDGER Account.
 After recording in the journal,
transaction are transferred and posted
to the ledger.
 All transactions for the same account
are collected and summarized.
 It I important to leave this paper trail to
verify accuracy and troubleshoots later
in the process if accounts are not
adding up.
 4. Prepare An
Unadjusted Trial
Balance
 Preparing an unadjusted trial
balance test the equality of debits
and credits as recorded in the
general ledger.
 Additionally, this provides the
balances if all the accounts that my
require adjustment in the next step.
• Debit and Credit merely signify
position- left and rights,
respectively.
• Both sided recorded amount
must be equal.
 5. Adjusting of
Trial Balances

 The fifth step, adjusting, accounts

for internal transactions, like the
use of prepaid rent or unearned
revenue.
 Adjustment may be required to
record an expense that may have
been incurred but not yet recorded.
  6. Prepare an
Adjusted Trial
Balance
 The sixth step is the
preparation of the adjusted
trial balance.
 Again tests the equality of
debits and credit,
encompassing all internal and
external transactions for the
reporting period.
 7. Preparing Financial
Statements
 Financial statements are
prepared.
 The Income Statement and
Statement of Owner’s Equity
are prepared first, followed by
the Balance Sheet, which pulls
information from the
Statement of Owner’s Equity.
 These are one of the primary
outputs of the financial
accounting systems.
 8. Closing the
Account
 The eight step in the accounting
cycle is to close accounts in
preparation for the next
accounting period.
 Temporary or nominal accounts
are closed, while permanent or
real accounts carry their
balances into the next period.
 Once completed, all revenue,
expense, withdrawal and
Income Summary balances
should be zero.
 9. Posting-Closing
Trial Balance
 Finally, the post-closing trial
balance lists the balances of the
accounts that were not closed,
such as assets, liabilities, and
owner’s equity.
 This trial balances helps verify that
permanent accounts balance, with
equal debit and credit sums, and
that all temporary accounts were
closed properly.
 DEFINITION
 Series of steps in recording an
accounting event from the time a
transaction occurs to its reflection
in the financial statements; also
called bookkeeping cycle, The
order of the steps in the
accounting cycle are: recording in
the journal, posting to the ledger,
preparing a trial balances, and
preparing the financial
statements.