Accounting Cycle

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of each month which is preparing trial balance. If no journal is maintained, transactions would simply be posted to the ledger as they occurred.
Step 4 in the accounting cycle involves making what are called adjusting entries to the general ledger.
Step 5 close and balance ledger
Step 6. prepare financial statements.
To aid in the preparation of financial statements, some companies will prepare a trial balance before they prepare financial statements. The trial balance is a list of all active accounts and each account’s debit or credit balance. The accounts are listed in the order they appear in the ledger assets first, then liabilities, stockholders’ equity, revenues, and expenses. By organizing accounts in this manner, the trial balance serves as a useful tool in preparing the financial statements.

Prepare the financial statements.

Adjusting entries are normally prepared at the end of each quarter or at the end of the year, although many firms prepare monthly ...

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