Accounting Cycle

The accounting cycle is a series of steps businesses follow to record, process, and report financial information. It begins with collecting all financial transactions, then recording them in journals. These records are then transferred to ledgers to organize accounts. Adjusting entries are made to reflect accurate balances, followed by preparing financial statements like the income statement and balance sheet. Finally, the cycle closes the books, resetting temporary accounts for the next period. This process ensures accurate financial reporting, helps managers make informed decisions, and complies with legal and regulatory requirements.