120 word response

The four steps of processing a transaction are:

1. Analyze and record transactions
2. Record transactions to journal
3. Post journal information to a ledger
4. 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.