Summary of the Accounting Cycle

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Financial Accounting
Liang Chen

Summary of the Accounting Cycle 1. Analyse business transactions 2. Journalize the transactions 3. Post to ledger accounts 4. Prepare a trial balance 5. Journalize and post adjusting entries: PrepaymentsAccrualsEstimates 6. Prepare an adjusted trial balance 7. !705,701L3,3.L,O89,9020398,3.420$9,902039 $9,902039414Z307806:L9 ,O,3.0 sheet 8. Journalize and post closing entries 9. Prepare a post-closing trial balance Beginning of a new accounting period Reversing Entries A reversing entry is made at the beginning of the next accounting period. It is the exact opposite of the adjusting entry made in the previous period. The preparation of reversing entries is an optional bookkeeping procedure that is not a required step in the accounting cycle. Correcting Entries Entries to correct errors made in recording transactions. Adjustments are journalized and posted only at the end of an accounting period. In
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