9 step of the accounting cycle
UNIVERSITY OF PHOENIX
9 Steps of the Accounting Cycle
XACC/280
1/28/2014
The nine steps of the accounting cycle helps you prepare an accurate closing trail balance. By doing these steps correctly will eliminate recording errors whether they are positive or negative. The first step is to analyze all the transactions made during the period of time the trial balance is for whether it is weekly, monthly or quarterly which really depends on how big is the business. The next step is to document what each transaction was for with the amount, date and why the transaction was made. The next step is to translate over to the ledger accounts. All the ledger account comes over on to the trial balance which the debits and credits should equal out if not there is a mistake somewhere on the first three steps of the process. Next step is to check over and record adjusting account amounts. These amounts are the depreciation amounts of accounts that are paid for multiple months ahead. After that step is to prepare the adjusted trial balance which should equal out as well if not there are misleading information on the accounts. In this step the business record salaries expenses and service revenues. The next step is to prepare the financial statement report. On this report the business record expenses and revenue for that period of time. This step shows the net income which should be a positive amount to increase the total income of the business. The nest steps are the final steps. After reviewing the closing entries which are permanent balance sheet accounts they then get transfer to the post trial balance which again is zero out if not there are mistake within the process which will need further reviewing. This cycle is a great tool but it “doesn’t prove that all transactions were recorded or the ledger is correct (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E.).”
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial
9 Steps of the Accounting Cycle
XACC/280
1/28/2014
The nine steps of the accounting cycle helps you prepare an accurate closing trail balance. By doing these steps correctly will eliminate recording errors whether they are positive or negative. The first step is to analyze all the transactions made during the period of time the trial balance is for whether it is weekly, monthly or quarterly which really depends on how big is the business. The next step is to document what each transaction was for with the amount, date and why the transaction was made. The next step is to translate over to the ledger accounts. All the ledger account comes over on to the trial balance which the debits and credits should equal out if not there is a mistake somewhere on the first three steps of the process. Next step is to check over and record adjusting account amounts. These amounts are the depreciation amounts of accounts that are paid for multiple months ahead. After that step is to prepare the adjusted trial balance which should equal out as well if not there are misleading information on the accounts. In this step the business record salaries expenses and service revenues. The next step is to prepare the financial statement report. On this report the business record expenses and revenue for that period of time. This step shows the net income which should be a positive amount to increase the total income of the business. The nest steps are the final steps. After reviewing the closing entries which are permanent balance sheet accounts they then get transfer to the post trial balance which again is zero out if not there are mistake within the process which will need further reviewing. This cycle is a great tool but it “doesn’t prove that all transactions were recorded or the ledger is correct (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E.).”
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial