Accounting cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company. During the accounting cycle, some additional records such as the general ledger and the
Trial balance: A trial balance is firstly prepared while making the financial statements. It is the summary of the closing balance of all the ledger accounts on a particular date. A trial balance is often prepared at the end of the accounting period in order to assist the accountants in the preparation of the financial statements.
Adjusted trial balance: Once the adjusting entries are made and posted to the ledger accounts, an adjusted trial balance is prepared. The main purpose of preparing an adjusted trial balance (second trial balance in an accounting cycle) is to check whether the debit and credit balance of the statements after passing the
Post-closing trial balance: After passing all the
To identify: The sequence of preparation of the three trial balances that are used in the accounting cycle.
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Chapter 4 Solutions
Accounting Principles, Volume 1: Chapters 1 - 12
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