Introduction

The last few lessons may have seemed detailed to you. Soon you will see the big picture of accounting. That is because you are not far from being able to prepare financial statements for a sole proprietorship service business.

You have learned about the accounting cycle and how the first three steps in the cycle are performed on a daily basis. The last five steps are considered the end of the accounting cycle. We are nearing the end of the cycle! But before continuing on, we need to review some major accounting concepts. Hopefully after completing this lesson, all of the pieces of the accounting puzzle will fit together.

Remember:

  • Sole Proprietorship - A business that has one owner.
  • The first three steps of the accounting cycle are:
    1. Analyze and verify source documents
    2. Analyze and journalize transactions
    3. Post from the journal to the ledger accounts.

Lesson Objectives

Following successful completion of this lesson, students will be able to...

  • Apply steps of the accounting cycle for service and merchandising businesses using manual and electronic methods.

Essential Questions

  • Do I understand the first three steps of the Accounting Cycle?
  • What are the first three steps of the accounting cycle?

Enduring Understandings

  • You must understand the importance of the first three steps of the accounting cycle.

The above objectives correspond with the Alabama Course of Study: Accounting standards: 4.