Accounting cycle
In one sentenceThe steps repeated every period, from recording transactions to preparing the financial statements, closing the accounts and starting a new period.
Simply put
The cycle starts with the source document (an invoice or voucher), then the journal entry, then posting to the ledger, then the trial balance, then adjusting entries, then the financial statements, then closing entries.
Understanding the order helps you find where an error is: a difference in the trial balance means an error in posting or in an entry, not in the statements.
Example
In a store whose year ends on 31 December: the year's invoices and vouchers are recorded, then the trial balance is reviewed, then depreciation and accruals are recorded, then the statements are prepared, then revenue and expenses are closed and the new year starts with the balances of the permanent accounts.