Definition
The accounting cycle is the combination of steps repeated monthly to enable a company to create a set of financial statements.
These steps are:
- Analyze the business transaction
- Create journal entries and posting to general journal book
- Posting to journalized accounts, T-Accounts & General Ledger
- Prepare a trial balance
- Adjust entries
- Prepare an adjusted trial balance
- Prepare financial statements.
- Journalize closing and reversing entries.
- Prepare a post-closing trial balance.
Prerequisites