Accounting Cycle
Barron's Accounting Dictionary:
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Accounting Cycle
Series of steps in recording an accounting event from the time a transaction occurs to its reflection in the financial statements; also called bookkeeping cycle. The order of the steps in the accounting cycle are: recording in the journal, posting to the ledger, preparing a trial balance, and preparing the financial statements.
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| Accounting Entity, Accounting Equation, Accounting Error |
Investopedia Financial Dictionary:
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Accounting Cycle
The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the accounting cycle are:
- Collecting and analyzing data from transactions and events.
- Putting transactions into the general journal.
- Posting entries to the general ledger.
- Preparing an unadjusted trial balance.
- Adjusting entries appropriately.
- Preparing an adjusted trial balance.
- Organizing the accounts into the financial statements.
- Closing the books.
- Preparing a post-closing trial balance to check the accounts.
Investopedia Says:
The accounting cycle is a methodical set of rules to ensure the accuracy and conformity of financial statements. Computerized accounting systems have helped to greatly reduce mathematical errors in the accounting process, but the uniform process of the accounting cycle also helps reduce mistakes.
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Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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