Accounting Cycle
The accounting cycle is often described as a process that includes the following steps:
- Identifying, collecting and analyzing documents and transactions
- Recording the transactions in journals
- Posting the summarized journals to accounts in the general and subsidiary ledgers
- Preparing an unadjusted trial balance and perhaps preparing a worksheet
- Determining and recording adjusting entries
- Preparing an adjusted trial balance
- Preparing the financial statements
- Recording and posting closing entries
- Preparing a post-closing trial balance
- Recording reversing entries
Accounting Cycle Today
The cycle actually refers to the steps performed in a manual accounting and bookkeeping system. With the advent of computers and inexpensive (some free) accounting and bookkeeping software once a transaction is entered all summarization, posting, and updating of all the records is automatically handled by the computer and the software. A reason every business not already using computer bookkeeping software should consider taking the "plunge".
The cycle actually refers to the steps performed in a manual accounting and bookkeeping system. With the advent of computers and inexpensive (some free) accounting and bookkeeping software once a transaction is entered all summarization, posting, and updating of all the records is automatically handled by the computer and the software. A reason every business not already using computer bookkeeping software should consider taking the "plunge".
Accounting Cycle Videos