The steps taken each month to process financial transactions
When a company engages in a financial transaction such as buying inventory, we would record that action a journal entry, transfer the entries in the journal into T accounts, record adjusting entries in the journal and the T accounts, transfer the balances of the T-accounts to a trial balance, use the trial balance to create an Income Statement, a Balance Sheet, a Statement of Retained Earnings, and a Statement of Cash Flows, create, journalize, and record closing entries in the T-accounts, and finally create a post-closing trial balance. This is the accounting cycle.
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