Accounting

We answer your accounting questions.

Over 500 questions have been answered on our accounting blog. Click here to suggest a question.



December 10, 2007

What is the accounting cycle?

The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries.

Cycle and steps seem to be a carryover from the days of manual bookkeeping and accounting when transactions were first written into journals. In a separate step the amounts in the journal were posted to accounts. At the end of each month, the remaining steps had to take place in order to get the monthly, manually-prepared financial statements.

Today, most companies use accounting software that processes many of these steps simultaneously. The speed and accuracy of the software reduces the accountant’s need for a worksheet containing the unadjusted trial balance, adjusting entries, and the adjusted trial balance. The accountant can enter the adjusting entries into the software and can obtain the complete financial statements by simply selecting the reports from a menu. After reviewing the financial statements, the accountant can make additional adjustments and almost immediately obtain the revised reports. The software will also prepare, record, and post the closing entries.

Related Questions



Comments

30 Responses to “What is the accounting cycle?”

  1. Nabeel Ahmed on December 26th, 2007 6:09 am

    Its a very usefull websites for the learners. but i could’nt find the answers of the questions in the Part 2 of the Cash flow statment. i think there is some errors in the page !

    anyways
    best of luch
    nabeel
    Pakistan, Lahore

  2. ACoach on December 27th, 2007 12:36 pm

    Thanks for the feedback, the errors have been fixed.

    You can view the answers in Part 2 by placing your cursor over the word “Answer”.

  3. Ramana Murthy V.V. on January 5th, 2008 2:18 am

    Dear Sir,
    Your explanation of the concepts is very clear. Especially terms like Common Size Statements. The student community if exposed to your accountingcoach.com, will be greatly benefited.

  4. sohail on February 20th, 2008 5:14 am

    This is very good site for student but i can’t see the worksheet chapter

  5. chandra on February 27th, 2008 1:34 am

    sir,
    can i a good explaination for journals,contra voucher,ledger,credit debit note,and balance sheet with example

  6. Chi on February 28th, 2008 3:57 am

    I should have visited this great website before going to my fisrt accounting lesson!! If you know what i am saying. Thank you!

  7. Hobo on March 12th, 2008 12:32 pm

    This website is a great addition to any accounting course. Concepts are explained in detail and are very helpful in providing students a different view and explanations of terms and processes that take place in the accounting world than some textbooks provide.

  8. Mohd on March 18th, 2008 5:52 am

    Really great experiences. I take this oppurtunity to wish all the people worked behind such a great programme. Again al the best and waiting for more more updates.

    From
    Dubai

  9. fayaze on March 26th, 2008 5:55 am

    Thanks to Organzer for arranging like this coach.

    From
    Bangladesh

  10. KhaledBajafar on May 25th, 2008 5:01 am

    Thank you for usefully informations .

    Bajafar
    Yemen

  11. kanakaraj on June 16th, 2008 1:38 am

    sir,
    i see all meanings, it is good
    but i want answer to some terms? is below:
    1).compayand
    2). corporation.
    3).enterprise ,,entity.
    4) mutual fund.

  12. shashi on July 11th, 2008 5:49 am

    thanks for to open accounting website on free of cost!

    Jaunpur(UP)
    INDIA

  13. ponnu on July 29th, 2008 4:00 pm

    thank you thank you , if i start to read this before one year i will be a good accountant no w .i want a lesson “how to tally a balance sheet”pls add it .it is a difficult task to tally balance sheet

  14. RNK on September 14th, 2008 2:27 am

    There are not many websites sharing accounting knowledge free of cost. And this websites stands as it contains good articles on accounting concepts!!

    Thank you indeed!!

  15. Rith on September 19th, 2008 3:22 am

    Dear Ms/Sir,
    Would you please posting all the accounting funtion for the cycle account with example one exercise is more better.

    Best Regards,

    Rith.

  16. mheg on November 21st, 2008 10:59 am

    …i need more info……….for our lesson.the cycle……….a figure…

  17. Tahir on January 8th, 2009 10:30 am

    What is general jounal

  18. James on January 20th, 2009 6:57 am

    It a good web

  19. AJ on April 6th, 2009 5:07 pm

    What are the typical items on the month end close checklist?

  20. shahbaz satti on April 8th, 2009 3:23 am

    this is very informative website. when u r lauching the software like peachtree at free of cost for new learner. shahbaz satti

  21. Ramana on May 18th, 2009 5:13 am

    This is a very good site fo the accounts students,who will be guide them a best way.

  22. Raghu.M.V on May 18th, 2009 5:18 am

    if any student who reads and follows he will be benefited.And i my self got benefit with this expertised analysis.thankful to those who supporting us.
    Raghu.M.V.
    Bengalore
    9886999088

  23. Hamid on June 7th, 2009 1:32 am

    Dears,

    I found this web site very interesting but informations about accounting cycle is not sufficient.

    thanks

    Best reagrds

  24. Sadat,Dhaka, Bangladesh on June 30th, 2009 9:37 am

    I am working now as an Accountant in a group of company at Dhaka.So this web site is very helpfull for me. Thanks.

  25. Nathan on July 27th, 2009 2:55 am

    I’m in accounting classes so I think this will help me out in finding the right place to look at the balance sheets, journals and other helpful info.

  26. Kelvina on September 15th, 2009 4:52 am

    Hi,

    I am learning accounting and i think that this information about accounting cycle is not sufficient. You need to give more explanation on this topic.

    Thanks

  27. Sher on September 15th, 2009 2:45 pm

    I love your website, especially the quizzes and drills. Keep up the good work

  28. Chuck on September 16th, 2009 4:18 pm

    Very helpful website.

    Thanks!

  29. JOHN on October 1st, 2009 9:15 am

    IAM VERY GRATEFUL FOR THE WEBSITE FOR THE EXCELLENTJOB YOUR DOING . I THANKL YOU SIR.KEEP UP THE GOOD SPIRIT OF TEACHING PEOPLE ACCOUNTS.HOWEVER,I HAV E THE FOLLOWING QUESTIONS:
    1.WHAT IS THE DIFFERENCE BTN IFRSs AND IAS
    2.WHAT IS DEFERRED TAX
    3.WHAT IS GAAP
    4.WHAT IS ACCOUNTING CYCLE
    5.HOW CAN I GET INFO.REGARDING CPA.

  30. Seangly on October 13th, 2009 12:44 am

    Ì want to know that does PURCHASE account appear in worksheet or not in trial Balance column?

Leave a Reply