ACCOUNTING CYCLE.

accounting cycle is generally refers to as involving various steps for business transactions and these steps are performed repeatedly.these are also followed for the preparation of financial statements.

STEPS INCLUDED:

• journal entries 
• ledger accounts
• trial balance
• adjusting entries
• adjusted trial balance
• closing entries
• closing trial balance
• financial statements

1.JOURNAL.

       "analysing business transactions and recording them into journal entries form on day to day basis"

basic type of journal is known as general journal.we record business transactions on day to day basis on a double entry system in it.

2.LEDGER ACCOUNTS.

next step involves the posting of journal entries into ledger accounts. every journal entry has a ledger account. it has a debit or credit balance.which is transfered to trial balance.

3.TRIAL BALANCE.

it is defined as "a statement of all the debit and credit items,made to test their accuracy."

 trial balance contains the all debit and credit balances of ledger accounts. it is made under the instruction of IAS. an unadjusted trial balance is made before any adjustment is made in a ledger.

4.ADJUSTING ENTRIES.

  An accounting entry made at the end of accounting period to allocate items between accounting period."

these entries are made at end of accounting period to adjust the ledger accounts.the main purpose is to match the expenses and revenues whichnis required by matching principle of accounting.

5.ADJUSTED TRIAL BALANCE.

after adjusting entries and posting them to ledgers,adjusted trial balance is made.it contains all balances of ledgers after adjusting entries done. 

6.CLOSING ENTRIES.

some accounts are closed in order to make their balances zero at the end of accountind period.these accounts include:

revenues

expenses

income summary

dividend

7.CLOSING TRIAL BALANCE.

it is made after closing entries posted to ledgers. the purpose of it is to assure that the total of debit is equal to total of credit before the new accounting period start.

8.FINANCIAL STATEMENTS.

financial statements presents the picture of financial position and position over period of time.it is the true picture of accountind information. some of them are:

income statement 

balance sheet etc..