Business Accounting

The accounting procedures described the accounting cycle may be summarized in eight step as follows.

1. Journalize Transaction (General Journal):
Enter all transaction in the general journal thus creating a chronological record of event.

2. Post to Ledger Accounts:
Post debit and credit from the general journal to the proper ledger accounts, thus creating a record classified by accounts.

3. Prepare a Trial Balance:
Summarizing the ledger accounts and testing the recording accuracy.

4. Adjusted Entries:
Draft adjusting entries in the general journal and post to ledger accounts.

5. Adjusted Trial Balance:
Prove again the equality of debits and credits in the ledger.

6. Financial Statements (Income Statement):
An income statement is needed to show the results of operation for the period. A balance sheet is needed to show the financial position of the business at the end of the period.

7. Balance Sheet:

8. Journalize and post closing entries:
the closing entries clear the revenue, expense and drawing accounts, making them ready for recording the event of the next accounting period. the closing entries also transfer the net income or loss of the completed period to the owner's capital account.

9. Post Closing Trial Balance:
This step ensures that the ledger remains in balance after posting of the closing entries.

these procedures represent a complete accounting cycle. some time it vary in some accounting books but basics are same.