DQ1
What are the steps in completing the accounting cycle? Discuss the relationship between the amounts on the adjusted trial balance for an account and its ledger? Discuss the relationship of the adjusted trial balance and the amount on the financial statements? What is the effect on the financial statements of missing a step when completing the accounting cycle?
There are nine steps to completing an accounting cycle which are: ϖ Analyze business Transactions

ϖ Journalize the Transactions ϖ Post to ledger accounts ❖ Prepare a trial balance ❖ Journalize and post adjusting entries: Prepayments/Accruals ❖ Prepare an adjusted trial balance

❖ Prepare financial statements: Income statement Retained earnings statement Balance sheet

ϖ Journalize and post closing entries ϖ Prepare a post-closing trial balance Account balances are transferred from the ledge onto the trial balance for review and adjustments, if necessary. The adjusted trial balance states a list of company’s accounts, and the balance of the account. A discrepancy found in the trial balance is adjusted to disclose accurate balance. After the account balances are entered onto the trial balance, the two columns are totaled. The totaled credit balance must be the same as the totaled debit balance; if not the trial balance is reviewed to find any errors in posting or journalizing. The adjusted trial balance assists in finding errors before financial statements are created. If a step is missed and not caught on the adjustment trial balance, the financial statement will be incorrect.

DQ 2 The four financial statements that we must create are: 1) the balance sheet; 2) the income statement; 3) the statement of cash flows and 4) the statement of retained