Steps In The Accounting Cycle

What does the accounting cycle mean? First, let us define the accounting cycle, the method in which a company or business, no matter the size supplies their economic reports for a certain time frame. During an accounting cycle report, you have to use the cash receipts, accounts receivable and payables along with other financial information for a business to keep track of the business’ profitability.

During an accounting cycle report, you have ten steps that should be used to give an accurate account of a company or business to determine their profitability. The first four steps are using the accounts receivable account along with service revenue if there is a service revenue account for the business. In step one, you would start with the account balances for

The income statement is an economic account of a business that covers a particular time frame. The income statement is important because it gives a breakdown of the revenues and expenses as well as the net income for a quarter or month depending on the time frame a company uses. The second financial statement that we will discuss is the statement of retained earnings that shows the retained earnings carried over from the previous quarter in a new business like Peyton Approved the carryover was zero, and the net income for the current quarter is $32,184.00 along with the dividends of -$3,000and the retained earnings of $29,184.00. It is of importance to a business to ensure they are making a profit for the quarter to show the retained earnings and to show to potential investors or banks for loans or lines of credit. Finally, the balance sheet is the statement that gives a breakdown of all the companies assets; current, short-term long term, liabilities current, total liabilities along with stockholder’s equity and to ensure they all balance