Accounting Cycle

What accounting cycle covers

The accounting cycle is the sequence that turns raw transactions into financial statements: analyse the transaction, journalise, post to the ledger, prepare an unadjusted trial balance, make adjusting entries, prepare an adjusted trial balance, produce the statements, then close the temporary accounts. Each step feeds the next, so an error early on propagates all the way to the statements.

Challenges here walk individual steps and full end-to-end cycles, so you can see how one posting error surfaces later as an out-of-balance trial balance.

Where marks are usually lost

• Closing permanent accounts — only revenue, expense and drawings/dividends accounts are closed.
• Preparing statements from the unadjusted trial balance instead of the adjusted one.
• Posting to the ledger without keeping the debit and credit sides equal.