The Accounting Cycle

The accounting cycle is the process or sequence of accounting procedures that takes place during the accounting period, from the occurrence and recording of the business transaction to the preparation of the financial statements.

The primary purpose of the accounting cycle is to ensure that all transactions are properly and correctly recorded, and records maintained, so that the financial statements can be prepared at the end of each accounting period. The bookkeeper and accountant are primarily responsible for the accounting cycle. The accounting cycle is shown in the steps below.

 

1. Business Transaction Occurs

2. Source Document is Prepared

3. Transaction is recorded In Journal

4. Amounts posted to Ledger

5. Trial Balance Prepared

6. Financial Statements Prepared

 

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