Accounting Cycle Steps

Step 1: Analyze the Transaction

1 CE

This step requires you to think about what is going on in the transaction, and what accounts are being impacted.

Step 2: Journalize Transaction

2

After deciding which accounts are affected, show those changes in your journal by debiting and crediting the appropriate accounts.

Step 3: Update Ledger

3

After journalizing, you will want to go to your general ledger of accounts and reflect on the changes made in your journal entries.

Step 4: Prepare Trial Balance

4

Give an estimated look at how your accounts will look after updating your ledger.

Step 5: Prepare Financial Statements

5

Once you have everything ready, all you have to do is create your balance sheet and income statement based on the changes you have made.