Question

The steps of the accounting cycle are presented below. Identify the correct order of the steps.

Answer 1

Answer:

The correct order is as follows:

a. Start with beginning account balances.

First start with the opening balances which are the closing balances from the last period.

b. Analyze and journalize transactions as they occur.

Enter transactions into their journals as they occur.

c. Post journal entries to the accounts.  

Post the entries from the journals to the relevant accounts in the company books.

d. Compute the unadjusted balance in each account and prepare the unadjusted trial balance.

Prepare the unadjusted trial balance based on those entries.

e. Enter the unadjusted trial balance on the worksheet and complete the worksheet (optional).

f. Journalize and post adjusting entries.

There might be errors so you would need to adjust the entries and then journalize them.

g. Prepare the adjusted trial balance.

Using these adjusted entries, prepare an adjusted trial balance.

h. Prepare the financial statements.

The adjusted balances will be used to construct financial statements such as the Balance sheet.

i. Journalize and post the closing entries.

Post the closing entries to the books.

j. Prepare the post-closing trial balance.

Then prepare the final trial balance which is also called the post-closing trial balance.