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![Accounting cycle assignment Accounting cycle assignment](http://3.bp.blogspot.com/-fErb9n2zFs0/T2hX6iwDUsI/AAAAAAAAADU/LIVnvxA14HU/s1600/accountingcycle.jpg)
An organization begins its accounting cycle with the recording of transactions using journal entries. The entries are based on the receipt of an invoice, recognition of a sale, or completion of other economic events.
After the company posts journal entries to individual general ledger accounts, an unadjusted trial balance is prepared. The trial balance ensures that total debits equal the total credits in the financial records. At the end of the period, adjusting entries are made. These are the result of corrections made and the results from the passage of time.
The second stage in the accounting cycle is posting entries from journal to the ledger account. Ledger is the principal book of accounting system. Whereas, journal is the original book of entry. General Ledger consists of numerous accounts in which transactions pertaining to these accounts are recorded.
For example, an adjusting entry may accrue interest revenue that has been earned based on the passage of time. The accounting cycle includes identifying and recording accounting events. The cycle is a set of rules and steps to ensure financial statements are prepared accurately and timely. The first step in the eight-step accounting cycle is to record transactions using journal entries, ending with the eighth step of closing the books after preparing financial statements. Accounting software today mostly automates the accounting cycle. The accounting cycle is generally a year, encompassing an accounting period.Timing of the Accounting Cycle.
The accounting cycle is started and completed within an, the time in which financial statements are prepared. Accounting periods vary and depend on different factors; however, the most common type of accounting period is the annual period. During the accounting cycle, many transactions occur and are recorded. At the end of the year, financial statements are generally prepared. Public entities are required to submit financial statements by certain dates. Therefore, their accounting cycle revolves around reporting requirement dates.
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The accounting cycle is completed at the end of the month, culminating in the close of that month’s books. The Blueprint breaks down the steps in the accounting cycle.
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