The overview of accounting cycle of a business

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Washington, DC Accounting
THE ACCOUNTING CYCLE

2. THE ACCOUNTING CYCLE OF A BUSINESS
Let’s take a look at the entire
accounting cycle of a business.
Business transactions are recorded in
a “Journal” during the month.
At the end of the month “Adjusting
Entries” are prepared, and placed
in the “Journal”.

3. THE ACCOUNTING CYCLE OF A BUSINESS
A final set of “Closing Entries “are
then placed in the “Journal”, and
the “Financial Statements” are
prepared.
The process begins again for the next
accounting period.

4. THE ACCOUNTING CYCLE OF A BUSINESS
Start: Transaction
Analysis
Journal Entries
Balance Sheet
Adjusting
and Income
Entries
Statement
Closing Entries

5. BASIC ACCOUNTING TERMINOLOGY
Journal
The book of original entry. All transaction are
recorded here first.
Adjusting Entries
These are entries to assign revenue and
expenses in the period incurred. These
additional month-end entries match expired
costs and unrecorded revenues to the period

6. BASIC ACCOUNTING TERMINOLOGY
Closing Entries
Entries made to zero balance all temporary
accounts at the end of the accounting period.
Income Statement
The profit or loss of the business based on
earnings less expense. This statement reflects
a period of time (usually one month)

7. BASIC ACCOUNTING TERMINOLOGY
Balance Sheet
A “snapshot” of the business’ assets, liabilities
and owner’s equity (also known as “net
worth”). Assets are property. Liabilities are
what is owed. Owner’s equity is the difference
between the assets and liabilities.
Transactions
Business papers and source documents.

8. Thank you! 
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