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Definition of 'Accounting Cycle'
The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the accounting cycle are:
Collecting and analyzing data from transactions and events.
Putting transactions into the general journal.
Posting entries to the general ledger.
Preparing an unadjusted trial balance.
Adjusting entries appropriately.
Preparing an adjusted trial balance.
Organizing the accounts into the financial statements.
Closing the books.
Preparing a post-closing trial balance to check the accounts.
Also known as "bookkeeping cycle".
The accounting cycle is a methodical set of rules to ensure the accuracy and conformity of financial statements. Computerized accounting systems have helped to greatly reduce mathematical errors in the accounting process, but the uniform process of the accounting cycle also helps reduce mistakes.
Accounting activities repeated in each fiscal period are Referred to as the accounting cycle .Fiscal period: the period of time over Which earnings are Measured .Accounting cycle : the steps of accounting activities that are followed during each fiscal period .So it is mentioned that there are8,9 ,10 .. So there are different opinions and attitudes.
But we can say it is :"Record transactions in journal . Post transactions to ledger accounts. Prepare adjusting entries at end of fiscal period and post to ledger accounts. Prepare summary of account balances . Prepare income statement from the revenue and expense account balances . Close revenue and expense accounts to Retained Earnings . Prepare post -closing summary of account balances . Prepare balance sheet and statement of cash flows . "
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The nine steps of the accounting cycle are:
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