Accounting Cycle

Accounting Cycle

Businesses may maintain an accounting cycle to keep track of finances for a specific amount of time "The Accounting Cycle is a series of steps which are repeated every reporting period and starts with making accounting entries for each transaction and ends with closing the books" (College cram). To ensure that a business is financially healthy an accurate a precise accounting cycle is necessary. This cycle demonstrates the financial stregnths and weaknesses of the business. A good financial team with extraordinary ethics and leadership is important to the company's success.

The accounting cycle has a series of processes within a timeframe for every transactional occurrence. The steps at the time of an accounting period are, identifying, analyzing, journalizing, and posting. . The Accounting department can consist of a director, manager, supervisor, and journal entry representatives. The performances of these processes are usually done within an accounting department. Trained professionals are generally responsible for the review of the closing of the books overseen by the chief financial officer within the company

The chief financial officer's position within a company usually consists of controller obligations, presents financial information. Treasury responsibilities are another area the CFO leads and guides the company into investments and is also accountable for the company's financial state. Economic strategy and forecasting is a part of the CFO position. The CFO's job is a very complex one.

To identify revenue a company can review receipts, bank statements, and other sources, paper or electronic. These documents will give an account of transactions.

A company will analyze these sources of information to determine amount of the transaction. Analyzing the transaction will also assist the company in understanding which account may result in a debit or credit adjustment.

Journalizing is the next step in which the transactions are recorded in the most suitable journal. Some examples are sales journal, purchase journal, cash receipt or disbursement journal, or the general journal" (Netmba). When the journal entry representative posts entries in these journals, the entries are in the sequence of the occurrence, date order.

Posting to general ledger accounts is next. General ledger accounts are "a collection of the firm's accounts" (Netmba). The organization of the ledger is by account.

These processes takes place in a company during the entire accounting "period as transactions occur or in periodic batch processes" (Netmba).

To balance these transactions a trial balance sheet is created to ensure that debits and credits are the same.

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