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Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition1
Chapter 1The Accounting Cycle
Ch1
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition2
The Accounting Cycle
This tutorial guides you through the eight steps of the accounting cycle. The accounting cycle includes ongoing and yearly activities.
For more detailed instructions, refer to Section 1.4 of the Accounting 1 textbook.
You may wish to review the accounting cycle as you progress through the course and encounter the steps in the cycle.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition3
The Accounting Cycle
Four of the steps occur in the outer ring.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition4
The Accounting Cycle
1. Transaction occur.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition5
The Accounting Cycle
2. Transactions are recorded in the journal.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition6
The Accounting Cycle
3. Journal entries are posted to ledger accounts.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition7
The Accounting Cycle
4. Trial balance and interim financial statements prepared.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition8
The Accounting Cycle
These outer ring activities are ongoing and cyclical.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition9
The Accounting Cycle
Four of the steps occur in the inner ring.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition10
The Accounting Cycle
5. The worksheet is prepared.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition11
The Accounting Cycle
6. Formal financial statements are prepared.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition12
The Accounting Cycle
7. Ledger accounts are adjusted and closed.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition13
The Accounting Cycle
8. The post-closing trial balance is prepared.
Chapter 1 – The Accounting Cycle l DRAFT | Accounting 1, 7th Edition14
The Accounting Cycle
The cycle is complete and it begins to repeat itself.