accounting cycle.

ACCOUNTING CYCLE:
                         "It is the procedure for recording, classifying and summarizing the accounting information in different financial reports".
There are various steps include in accounting cycle. These steps are to be followed for recording the business transactions and for the preparation of complete Financial Statement. As it is a cycle , so this procedure to be repeated again and again for keeping up to date records of business transactions.
Steps Included:
                     Following steps are included in an Accounting Cycle ;
1. Journal
2. Ledger
3. Trial Balance
4. Adjustments at the end
5. Adjusted Trial Balance
6. Financial Statements
7. Closing Entries
8. After Closing Trial Balance

JOURNAL:
               "It is a day to day record of business transactions".
The basic type of journals are known as General Journals. Analysing the business transactions and recording them in the form of Journal entries. Analysing business transaction means whether the particular event effect the assets, liabilities and owner's Equity. Two accounts are involved in it.One is debited and other is credited.Journal is made in proper format. As soon as an event is happen it is recorded in the form of journal entries.

LEDGERS:
               "A book to which the record of accounts is transferred from original postings".
Next step after journalizing the transactions is the formation of the accounts in the form of ledgers. Every account in the journal entry has its own ledger account. The format of ledgers are according International Accounting Standards. Ledgers have a debit or credit balance. All the transactions from the journal are posted tto ledgers after each entry is done in such a way that debit amount of a journal entry is transferred to the debit side of the particular ledger and the credit amount is transferred to the credit side of the particular ledger.

TRIAL BALANCE:
              "A statement of all the open debit and credit items in a double entry ledger, made to test their equality".
In trial balance there is a list of the balances of ledgers of a business at a specific time,at the end of a specific period. An unadjusted trial balance is made before any adjustment is made in the ledger. All what is done in the trial balance is to list the balances of the ledgers of a business. A Trial balance has a format in which all the ledger accounts are posted to get an equal of a debit and a credit of posted accounts. It is made under the instructions provided by the IAS.

ADJUSTING ENTRIES:
          " An accounting entry made at the end of accounting period to allocate items between accounting periods".
Adjusting entries are recorded at the end of accounting period to adjust ledger accounts for any changes that relate to the current accounting period but have not yet been recorded. A common characteristic of all adjusting entries is that they involve at least one revenue or expense account. Not all journal entries recorded at the end of a period are adjusting entries. The main purpose of adjusting entries is to match revenues and expenses to the current accounting period which is a requirement of the matching principle of accounting.

ADJUSTED TRIAL BALANCE:
         An Adjusted Trial Balance is a list of the balances of ledgers which is made after the adjusting entries are done. Adjusted trial balance contains balances of revenues and expenses along with those of assets, liabilities and equities after the changes occur due to adjusting entries.

FINANCIAL STATEMENTS:
         Financial statements are structured presentation of a business's financial performance, financial position and changes in financial position over time. It is the final output of an accounting information.
 Following are the types of financial statements ;
1. Income Statement.
2. Balance Sheet.
3. Statement of Cash Flow.
4. Statement of Changes in Equity.
5. Notes and Other Disclosures.

CLOSING ENTRIES:
         It is necessary to close the temporary accounts in order to make their balances zero at the end of accounting period. The temporary accounts are closed when their balances are transferred to permanent accounts.Closing entries are based on the balances of accounts in the adjusted trial balance.
Temporary accounts include:
1. Revenues
2. Expenses
3. Dividends
4. Income Summary

AFTER CLOSING TRIAL BALANCE:
            Post closing trial balance is a list of balances of ledgers prepared after passing adjusting entries and their postings to the ledgers. Post closing trial balance is prepared in  the last step of the accounting cycle and its purpose is to assure that sum of debits equal the sum of credits before the new accounting period starts.