Accounting Process Cycle

The accounting process cycle refers to a series of sequential steps or procedures performed to accomplish  the accounting process. The steps in the cycle and their aims follow:

                                      Step 1   Identification of events to be Recorded
                                                    This is to gathered information about transaction or events
                                                    generally through  the source of document.

This is during the           Step 2   Transaction are Recorded in the Journal
accounting period                         This is to record the economic impact of transactions on the firm in a
                                                     journal, which is a form that facilitates transfer to the accounts.    

                                   
  -----------------------       Step 3    Journal Entries are Posted to the Ledger
                                                     This is to transfer the information from the journal to the ledger for
                                                     classification.


                                      Step 4   Preparation of Trial Balance
                                                    This is to provide a listing to verify the equality of debit and
                                                    credits in the ledger.


                                      Step 5   Preparation of the Worksheet include Adjusting entries
                                                    This is to aid in the preparation of financial statement.


                                      Step 6   Preparation of Financial Statement
                                                    This is to provide useful information to decision makers.
This is at the
end of accounting          Step 7   Adjusting Journal Entries are Journalized and Posted
period                                           This is to record the accruals, expiration of deferrals, estimation and other
                                                     transaction from the worksheet.


                                      Step 8   Closing Journal Entries are Journalized and Posted
                                                    This is to close temporary accounts and transfer net income to owner
                                                    equity.

----------------------           Step 9    Preparation of a Post-Closing Trial Balance
                                                     This is to check the qualify of debits and credits after the closing entries. 

This is the                      Step 10   Reversing Journal Entries are Journalized and Posted
start of the                                    This is to simplify the recording of certain regular transaction in the next
next period                                    accounting period.

This cycle is repeated each accounting period. The first three steps in the accounting process are accomplish during the period. The fourth up to nine steps generally occurs at the end of he period. The last step is optional and occurs at the beginning of the next accounting period.