Skip to content
Finance Trade Deals

Finance Trade Deals

Finance Support Tips

Primary Menu
  • Home
  • Contact
  • Accounting

What Is the Accounting Cycle?

Andreas January 24, 2022 1 min read

The accounting cycle is the process of recording, sorting, and crediting payments within a business. In most cases, this occurs at the end of the year, although some companies balance their books daily. The information from the transactions in the accounting cycle is used to prepare financial statements such as the balance sheet and cash flow report. After completing these steps, business accounts are closed out and prepared for the next accounting period.

The fourth step of the accounting cycle involves calculating the trial balance, which tells the company the unadjusted balances in all accounts. This information is then carried forward to the fifth step, where it is analyzed and tested. The goal of this step is to ensure that the total credit balance equals the total debit balance. The trial balance must also be verified to ensure that there are no errors.

The final step in the accounting cycle is recording transactions. These should be done in a chronological order, in accordance with accrual accounting principles. The accounts that are affected by the transaction can be recorded in a general record or in a discrete record. Another option is using double-entry accounting, which records the transaction as both a credit and a debit. This method, called T-accounts, makes closing entries easier.

Tags: What Is the Accounting Cycle?

Continue Reading

Previous: Three Examples of How an Accounting Information System Works
Next: What Does an Accounting Executive Do?

Related Stories

Accounting Basics to Help You Run a Successful Business
2 min read
  • Accounting

Accounting Basics to Help You Run a Successful Business

May 27, 2022
The Importance of Accounting For Management
3 min read
  • Accounting

The Importance of Accounting For Management

April 21, 2022
What Does an Accounting Executive Do?
3 min read
  • Accounting

What Does an Accounting Executive Do?

February 2, 2022

You may have missed

How to Create a Budget and Stick to It
4 min read
  • Finance

How to Create a Budget and Stick to It

September 22, 2023
Top Forex Trading Platforms and Tools for Successful Trading
3 min read
  • Investment

Top Forex Trading Platforms and Tools for Successful Trading

September 4, 2023
Strategies For Successful Real Estate Investing in 2023
3 min read
  • Investment

Strategies For Successful Real Estate Investing in 2023

August 10, 2023
Real Estate Investment in the Digital Age
3 min read
  • Investment

Real Estate Investment in the Digital Age

July 27, 2023

Recent Posts

  • How to Create a Budget and Stick to It
  • Top Forex Trading Platforms and Tools for Successful Trading
  • Strategies For Successful Real Estate Investing in 2023
  • Real Estate Investment in the Digital Age
  • Navigating the World of High Yield Investment Programs

ADS

ADS

Copyright © All rights reserved | Finance Trade Deals