There is an 8-step process to the accounting cycle. These 8 steps are: Identifying and
recording transactions, preparing journal entries, posting to the general ledger, generating
unadjusted trial balance report, preparing worksheets, preparing adjusting entries, generating
financial statements, and closing the books.
The first step in the accounting process is to identify and record transactions through
journals. When business events occur or a financial activity, transactions must be recorded in the
books while also being included in the financial statements. There are both monthly and annual
accounting periods to be recorded.
For individual transactions there are three steps to the accounting process which are to
identify the transaction, prepare a business document, and identify the relevant account(s).
First, we identify the transaction by determining what kind of transaction it may be.
Examples would be buying goods from suppliers, selling products to customers, paying
employees, and recording the receipt of cash from customers. Second, there is frequently a
business document to be prepared or
to initiate the transaction, such as an
to a customer or an invoice from a supplier. Lastly, every business transaction is
recorded in an account in the accounting database, such as a
account. We must identify which accounts are to be used to
record the individual transaction.
A cash position refers specifically to
an organization's level of cash relative to its
expenses and liabilities
. Internal stakeholders look at cash position as frequently as daily, while
external investors and analysts look at an organization's cash position on its quarterly cash flow
Net Income: $51,565.00
Sales Revenue: 5,525.00