Question

Review the steps in the accounting cycle, and answer the following questions: 1. What is the first step? 2. Are any steps optional? 3. Which steps are completed throughout the period? 4. Which steps are completed only at the end of the period? 5. What is the last step in the accounting cycle?

Short answer

(1)Start with the beginning account balances

(2) Enter the unadjusted trial balance on the worksheet and complete the worksheet

(3Journalizing transactions and posting to the accounts

(4)Adjusting the accounts, preparing the financial statements, and closing the accounts

(5) Prepare the post-closing trial balance.

Step-by-step solution

Explanation on First Step

In the first step of accounting cycle, beginning balance of each account is recorded in the account.

Explanation on Optional Step

The optional step in the accounting cycle is to enter the values in the unadjusted trial balance in the worksheet and complete it. This step can be avoided as preparing a worksheet is not mandatory.

Explanation on Steps Completed Through the Period

Recording and posting the journal entry into the accounts are the steps that are completed throughout the period. In simple words, steps 1 to 3 are completed during the period.

Explanation on Steps Completed at the End of Period

Recording and posting the adjusting entries, preparing the financial statements, and recording and closing entries are the steps that are completed at the end of the period.

Explanation on Last Step

The last step in the accounting cycle is related to preparing the post-closing trial balance of the business. It is prepared after recording and posting closing entries.