Accounting Cycle

An accounting cycle is an eight-step process that is followed by businesses. A complete and holistic process of identifying, recording, and calculating various financial events in the accounting section of an organization is known as an accounting cycle. Accounts, debits, credits, journal entries, and other transactions which are leading up to a financial statement are generally incorporated in it. The full cycle comprises a one-year accounting period in many instances.

A standard process designed to structure accounting processes for business owners is called as an accounting cycle. An  accounting software can be used by companies to automate the financial management process and also to ensure accurate records and increase efficiency.

An accounting cycle has eight steps and the order of the steps and how they are described may vary depending on the type of business. However, the overall process should remain consistent to get the best results. Identifying all business transactions, Recording transactions accordingly, Posting to the general ledger, Calculating the trial balance, Adjusting entries as needed, Updating the trial balance, Preparing financial statements and Closing the books are the eight steps involved in an Accounting Cycle.

Accurate financial reporting, Compliance and Streamlined processes are some of the benefits of accounting cycles.