Accounting Cycle, Know the Main Stages to How to Make It
The field of accounting does have a very important role so that the sustainability of a company or business can be well monitored. This is suspected because accounting has the main objective as a provider of information that can be used to make important decisions in maximizing the performance of a business.
To be able to get the information needed, an accountant will usually carry out a variety of activities. Accountants are responsible for collecting data and process it systematically in a certain period of time. Usually the series is carried out in a one-year period.
The accounting process or accounting cycle is the activity of collecting and processing data in a period of time. In other words, the accounting cycle can be interpreted as the process of preparing financial statements. Of course, the financial statements must be made in detail and can be accounted for.
Despite having an important role, not a few companies, especially small to medium scale, decided to arrange an accounting cycle. In fact, recording ordinary financial flows is not enough to be able to make business decisions that can help the development of business operations. For that, for those of you who intend to compile an accounting cycle, consider the following important stages.
Stages of Developing the Accounting Cycle
1. Identify Transactions
In compiling the accounting cycle, the first thing to do is to collect all the transactions in a certain period. You need various sources of transaction documents such as invoices, receipts, cash receipts, and so on.
Make sure that you have all the financial documents within the specified time period. That way, the financial cycle report will be detailed and can be accounted for.
2. Move the Contents of the Accounting Transaction Journal to the General Ledger
Journal of accounting transactions is a summary and record of transactions carried out by companies or businesses. Usually, the recording and summary container is called a journal book.
In transferring records in a journal to the general ledger, it must be adjusted to the type of transaction and also the estimated name of each transaction. This activity of transferring records from journals to ledgers is also often referred to as posting.
Furthermore, the general ledger contains a collection of accounting accounts for certain assets or assets of all related companies. That way, accounting reports in the general ledger can become a single unit and have a more complete and detailed explanation.