The next three steps in the accounting cycle are adjusting entries (journalizing and posting), preparing an adjusted trial balance, and preparing the financial statements. Accrual basis accounting is used by US GAAP or IFRS-governed companies, and it requires revenues and expenses to be recorded in the accounting period in which they occur, not necessarily where an associated cash event…

Accounting periods help companies do this by breaking down information into months, quarters, half-years, and full years A calendar year considers financial information for a company for the time period of January 1 to December 31 on a specific year.

accounting period — breaks down company financial information into specific time spans and can cover a month, quarter, half-year, or full year. fiscal year — twelve-month reporting cycle that can begin in any month, and records financial data for that twelve-month consecutive period. adjusting entries — update accounting records at the end of a period for any transactions that have not yet been recorded. adjusted trial balance — list of all accounts in the general ledger, including adjusting entries, which have nonzero balances.