Accounting and Finance Foundations

Unit 6

Accounting and Finance Foundations Unit 6: Journalizing 460

Journalizing

Chapter 16

Student Guide

Lesson 16.1 The Accounting Cycle: Steps Two through Four

As you learned in Unit 5, the accounting cycle always begins with business transactions and events.

After analyzing the source documents for these transactions and determining their effect on the

accounting equation (step one of the accounting cycle), you need to also determine how these

transactions affect the company’s performance and financial position. To do so, you post business

transactions in the general journal and use that information to prepare the trial balance. Ultimately,

the completion of the accounting cycle provides useful financial statements for decision makers.

Analyze Transactions

and Source Documents

Journalize Entries in

the General Journal

Post the General Journal

to the General Ledger

Prepare Adjusting

Entries, Vouchers, and

the Trial Balance

Prepare Financial

Statements

Analyze and Review the

Financial Statements

Prepare Closing

Entries

Post Closing Entries

to the Trial Balance