The Accounting cycle What is the Accounting Cycle? The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an un-adjusted trial balance, determining and recording adjusted entries , preparing an adjusted trial balance , preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance , and perhaps recording reversing entries . The chart below shows a simplified version of what the account cycle looks like. Transactions Financial transactions start the process. Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves the exchange of the company’s assets, the establishment or ...