ITPEC FE Morning October 2018 Question 80

Accounting Cycle Order — The correct workflow from transaction records to closing accounts

The standard accounting cycle follows this sequence:

Journal Book → General Ledger → Trial Balance Sheet → Work Sheet → Financial Statements

1. Journal Book: All transactions are first recorded chronologically as journal entries
2. General Ledger: Journal entries are posted (transferred) to individual accounts
3. Trial Balance Sheet: Verifies that total debits equal total credits after posting
4. Work Sheet: A worksheet is prepared for adjusting entries and corrections
5. Financial Statements: Final reports (Balance Sheet, Income Statement) are produced

Correct answer: c)

Why not others:
- a), b): Start with General Ledger — transactions must be journalized first
- d): Places Work Sheet before Trial Balance Sheet — the trial balance is prepared immediately after posting to the ledger, before adjustments are made on the worksheet

Key rule: The accounting cycle always starts with the Journal Book and ends with Financial Statements. The Trial Balance comes before the Work Sheet because you verify balances first, then make adjustments. Remember: J → G → T → W → F ("Just Get The Work Finished").

AI-generated — may contain errors