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The Accounting Cycle Steps - Research Paper Example
Finance & Accounting
Pages 4 (1004 words)
The Accounting Cycle Steps Author Institution The Accounting Cycle Steps Introduction Accounting cycle details the steps that the preparation and recording of business transactions follows. All the activities involved in the recording and preparation of financial statements during a certain accounting period is what is referred as the accounting cycle…
Some of the financial statements prepared during the accounting cycle include the balance sheet, the income statement, statement of shareholders equity, as well as the cash flow statement (Agtarap-San, 2007). The accounting cycle may take place with regard to time in which the organization prepares its financial statements. For example, a business may prepare its financial statements on a yearly, quarterly, or monthly basis (Warren, 2010). This paper will discuss the steps of the accounting cycle right from the recording of transactions to preparing of financial statements. The Ten Steps of the Accounting Cycle Step 1-Analyzing Transactions There are ten steps involved in the accounting cycle; step one to three take place during the entire accounting period whereas the other steps from four ten occur in the end of an accounting period. The first step includes the analyzing of transactions. In this step, an organization look at the source documents, which include the description of the events and transactions. Source documents can either include electronic sources or hard copies. Some of the source documents that the organization analyzes during this step include cheques, bank statements, as well as purchase orders. ...