Find below the Accounting Cycle scheme and Accounting Cycle steps. This is the process, which should be followed in order to account for business transactions properly and provide accounting data to its users for decision making purposes.
Accounting cycle represents a sequence of certain accounting activities to be followed in a determined order with the purpose to record business transactions and prepare financial statements.
Depending on the accounting period, the activities in this cycle are repeated through each accounting period – month, quarter, year.
Below you will be able to inspect all steps in the accounting cycle separately and understand, what exact actions must be taken under each of them.
Steps of the Accounting Cycle
- Analyze, journalize transactions
- Summarize accounts, general ledger posting
- Trial balance preparation
- Period-end adjusting entries
- Adjusted trial balance preparation
- Preparation of financial statements
- Close general ledger accounts (income/expenses)
So, in the Accounting Cycle the last step is:
close general ledger accounts, which balances at the end of the accounting period should be zero – Income and Expenses.
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