What is accounting cycle?

Question

Accepted Answer

The accounting cycle is a series of steps that businesses take to record financial transactions and prepare financial statements.

The accounting cycle typically includes steps such as analyzing transactions, journalizing, posting to the general ledger, preparing a trial balance, adjusting entries, preparing financial statements, closing entries, and preparing a post-closing trial balance.
Each step in the accounting cycle is essential for accurately recording and reporting a company's financial information.
For example, analyzing transactions involves reviewing and categorizing financial activities, while adjusting entries are made to ensure that financial statements reflect the most up-to-date information.
The accounting cycle helps ensure that financial information is accurately recorded and reported in a timely manner, allowing businesses to make informed decisions based on their financial health.

Accepted Answer

It is a collective process of identifying analysing and recording the Accounting events of a company.
Identify transactions, record transactions in a journal, posting transactions in a general ledger, unadjusted trial balance, worksheet preparation for any adjustments, adjusting journal entries like year end journal entries, financial statements, closing the books, it involves finalizing temporary accounts eg. Transferring net income to retained earnings

What is accounting cycle?

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