Steps in the Accounting Cycle

AccountingKerri Perry

The Accounting Cycle

Step #1Analyze Business

Transactions

Step #5Journalize & Post Adjusting Entries:Deferrals/Accruals

Step #6Prepare an

Adjusted Trial balance

Step #2Journalize the Transactions

Step #3Post to Ledger

Accounts

Step #8Journalize and

Post Closing Entries

Step #9Prepare a Post

Closing Trial Balance

Step #7Prepare Financial

Statements:Income Statement,

Owner’s Equity Statement, Balance

Sheet

Step #4Prepare a Trial

Balance

*Optional Steps: If a worksheet is prepared, steps 4-6 are incorporated in the worksheet. If reversing entries are prepared, they occur between stages 9 and 1.

Question #1

• How many steps are required in the accounting cycle?– 8 steps– 5 steps– 9 steps– 7 steps

Question #2

• What does the first step of the accounting cycle include?– Posting to ledger accounts– Analyzing business transactions– Preparing an adjusted trial balance– Journalizing transactions

Question #3

• Which of the following is not a financial statement (part of step #7)?– Balance sheet– Income statement– Balance statement– Owner’s Equity Statement

Question #4

• True/False-There are optional steps to the accounting cycle?– True– False

Question #5

• What does the last step in the accounting cycle include?– Preparing financial statements– Journalizing and posting closing entries– Preparing an adjusted trial balance– Preparing a post-closing trial balance

Correct!

Forward to Question #3

Forward to Question #5

Forward to Question #4

Forward to Question #2

Incorrect!

Back to Question #1

Incorrect!

Back to Question #2

Incorrect!

Back to Question #3

Incorrect!

Back to Question #4

Incorrect!

Back to Question #5