Accounting Cycle Is The Cumulative Process Of Recording And Organizing The Accounting Events Of A Company

The accounting cycle is the cumulative process of recording and organizing the accounting events of a company. Broken into nine steps, the accounting cycle begins with the collection of data and verification of source documents. Step two covers the analyzation of each transaction. In step three each transaction is journalized. When the transaction has been both analyzed and journalized, we then post these to the ledger, in step four. Step five deals with the preparation of a trail balance. In step six, a worksheet is produced. Once we have gathered all of this data, we will prepare the appropriate financial statements in step seven. Step eight brings all of our work together as we journalize and post the closing entries. Finally, in step nine we will prepare a post closing trial balance. Though the accounting cycle may initially seem daunting, you will find that it’s actually quite simple once you comprehend these steps. As we begin the accounting cycle, we will collect data and verify source documents. At this initial stage, all receipts and invoices are collected organized for further inspection. It is important to note the dates listed on the source documents so that they may be sorted accordingly. After we have collected, verified, and organized our source documents, we then begin the analyzation process. This step is the beginning of the debits and credits system. Using the source documents from the first step, a t-chart with debit and credit information is created.…