accounting cycle

Accounting Cycle Summary

The main and basic objective of accounting in any organization is to collect financial information and to prepare financial statements.To meet these primary objectives through the above mentioned process, it needs a certain cycle which is known as accounting cycle.First step is to collect and analyze the data from transactions then  journalize those transactions into a proper journal.After the general journal entries which is also called book of original entry, adjusting entries are then made from the transactions.After journalizing the data, post those entries(general journal and adjusting) to the ledgers and every account have their own ledger. All transactions for the same account are collected and summarized in one account. After making ledgers, close the accounts by making closing entries of:

1. Revenue Account, 
2. Expenses Account, 
3. Retained Earnings and 
4. Income Summary Account

After journalizing the closing entries, Income Summary Account ledger is made. Then After Closing Trial Balance is made according to the adjusted entries and closing entries, which can also be called as Balance Sheet. Income Statement and Statement of Retained Earnings is made after the trial balance.