The accounting cycle

Question 1

Step 1

Answer 1

Each transaction has a source document

Question 2

Examples of step 1

Answer 2

EFT, receipts, invoices, B/S

Question 3

Step 2

Answer 3

Transactions are recorded in Subsidiary journals

Question 4

Examples of step 2

Answer 4

Cash receipts journal (CRJ) or (CPJ) cash payments journal

Question 5

Step 3

Answer 5

At the end of the month the journals are posted to the General ledger

Question 6

Example of step 3

Answer 6

T-accounts

Question 7

Step 4

Answer 7

A Trial balance is drafted from the General ledger

Question 8

Step 5

Answer 8

The Trial balance is used to prepare Financial statments

Question 9

Step 6

Answer 9

The Financial statements are analysed and this information is used for decision making in the future