The four steps of processing a transaction are: Analyze and record transactions Record transactions to journal Post journal information to a ledger Prepare an unadjusted trial balance

The four steps of processing a transaction are:

Analyze and record transactions
Record transactions to journal
Post journal information to a ledger
Prepare an unadjusted trial balance

The form we create after the final step of processing is complete is the adjusted trial balance. This form shows all balances and adjustments made on the accounts. Once this step has been completed then we move into preparing the three financial statements needed. The first one is the income statement, then the owner's statement of equity, and then the balance sheet. The order is needed to support each statement. For example, the net income from the income statement is needed to calculate the owner's equity amount from the earnings less the dividends. Then that total is included on the total equity on the balance sheet. If these financial statements were not in order then the numbers will not be accurate.

Expert Solution

The four steps of processing a transaction are Analyze and record transactions, record transactions to journal, post journal information to ledger, prepare an unadjusted trial balance. The final step of processing is the adjusted trial balance which shows the balances and adjustments on accounts . Once this step is completed then we move into preparing the financial statements. The three financial statements after four steps of processing are Income statement, owner statement of equity and then the Balance sheet. The net income from income statement is required to calculate owner's equity amount from earnings less dividends which is included on total equity on Balance sheet. If the financial statements are not in order, the number will not be accurate.

ekkarill92 answered 2 years ago

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