Quick MBA Accounting Cycle
 

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Re: Quick MBA Accounting Cycle
 

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The Accounting Cycle
The sequence of activities beginning with the occurrence of a transaction is known as the accounting cycle.
This process is shown in the following diagram:

Steps in The Accounting Cycle
Identify the Transaction
Identify the event as a transaction and generate the source document.

Analyze the Transaction
Determine the transaction amount, which accounts are affected, and in which direction.

Journal Entries
The transaction is recorded in the journal as a debit and a credit.

Post to Ledger
The journal entries are transferred to the appropriate T-accounts in the ledger.

Trial Balance
A trial balance is calculated to verify that the sum of the debits is equal to the sum of the credits.

Adjusting Entries
Adjusting entries are made for accrued and deferred items.
The entries are journalized and posted to the T-accounts in the ledger.

Adjusted
Trial Balance
A new trial balance is calculated after making the adjusting entries.

Financial Statements
The financial statements are prepared.

Closing Entries
Transfer the balances of the temporary accounts
(e.g. revenues and expenses) to owner's equity.

After-Closing
Trial Balance
A final trial balance is calculated after the closing entries are made.