Identify the transaction or event.
Prepare the transaction's source document
Analyze and classify the transaction.
Transactions are recorded in the journal
Transactions are posted to the ledger
An unadjusted trial balance is prepared
An optional end-of-period worksheet is prepared
Adjusting entries are journalized and posted to the ledger
Adjustment data are assembled and analyzed
1st Step : Make the List of Transactions which need Adjustments
2nd Step : Adjustment Entry of Outstanding Expenses
3rd Step : Adjustment Entry of Advance Expenses
4th Step : Adjustment Entry of Oustanding Incomes
An adjusted trial balance is prepared
Financial statements are prepared
2. Statement of retained earnings
Closing entries are journalized and posted to the ledger
Closing the revenue accounts to Income Summary
Closing the expense accounts to Income Summary
Closing the Income Summary account to Retained Earnings
Closing the Dividends account to Retained Earnings
A post-closing trial balance is prepared
