Definitions
What is the accounting cycle?
The step-by-step process of recording and reporting financial transactions
The first step in the accounting cycle
collecting source documents
What is collecting source documents?
Using a receipt to record a transaction
What are source documents?
Original records that provide evidence of transactions
Recording transactions in journals is which step?
Step 2
What is recording in books of original entry?
Recording a sale in the sales journal
What are journals (books of original entry)?
Books where transactions are first recorded
What is Step 3?
Posting transactions to ledger accounts is which step
What is posting to the ledger?
Transferring amounts to ledger accounts
What are ledgers?
Books where accounts are kept and transactions are classified
What is Step 4?
Preparing a trial balance
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A statement used to check arithmetic accuracy
A Trial Balance
What is Step 5?
Preparing financial statements
What is financial statements?
Preparing income statement and balance sheet