The Accounting Cycle

Question 1

Step 1

Answer 1

For each business transaction that occurs during the accounting period, determine the effect of the transaction on the general ledger accounts.

Question 2

Step 2

Answer 2

Make an entry in the general journal for each transaction and post the entry to the general ledger accounts.

Question 3

Step 3

Answer 3

At the end of the accounting period, before preparing the financial statements, determine if any of the general ledger account balances need to be adjusted. Enter any required adjusting entries into the generals journal and post the adjusting entries to the general ledger accounts.

Question 4

Step 4

Answer 4

Prepare a Pre-closing trial balance to determine that the accounts in the general ledger are in balance.

Question 5

Step 5

Answer 5

Prepare an income statement from the ending balances in the general ledger revenue and expense accounts.

Question 6

Step 6

Answer 6

Calculate the ending balance of the retained earnings account that is needed for the preparation of the balance sheet.

Question 7

Step 7

Answer 7

Prepare the balance sheet from the ending balances in the general ledger asset accounts, liability accounts, common stock account, and the calculated ending balance for the retained earnings account.

Question 8

Step 8

Answer 8

Prepare and enter the revenue, expense, and dividend closing entries into the general journal, and post the closing entries to the general ledger accounts.

Question 9

Step 9

Answer 9

Prepare a post-closing trial balance to determine that the accounts in the general ledger are in balance and ready to start a new accounting cycle.