what is accounting cycle

   Accounting cycle
 For getting the knowledge about accounting cycle firstly we have to know what is an accounting cycle ..Accounting cycle is a process in which the data is finalised or stated with a profit or loss at the end. It provides complete information of the entries and their postings. Following are the steps of accounting cycle:-

 1. Collecting data 

      2. Analyzing the data

                    3. Recording the transactions 

               4. Preparing the general ledger

                                 5. Making the trial balance and adjusting it

6. Income statement

              7. Statement of retained earnings

8. Financial statement  

           

JOURNAL :-
                               It is the first book of accounting cycle. Journal is a book of accounts in which the record of daily happening is written in the form of entries on specific date. It is also called a day book, a book of original entry etc. The process of writing entries in a journal is known as "JOURNALISING". It is widely used in accounting cycles. It is the first step of maintaining accounting data. With the help of journal we can easily recognize as to what is being increased of decreased in our business.

Ledger :-
              The second book of accounts is the ledger. Ledger is a book in which the record of each entry is individually posted in their accounts and this process is known as "POSTING". We can also say that ledger is "A book in which the monetary transactions of a business are posted in the form of debits and credits". In this book we can clearly find out the accounts and their balances. It helps a lot in providing the further information to other books of account.

Trial balance:-
                    Trial balance is a two column statement of debit and credit. A trial balance proves the equality of debit and credit. Trial balance contains both BALANCE SHEET and INCOME STATEMENT ACCOUNTS. The total of the debit and credit columns should agree.

Income statement:-
                           Income statement is an activity statement that shows details and results of the company's profit retained activities for a period of time. It also helps in depicting the revenues and expenses.

Statement of retained earnings:-
                             Retained earnings is a revenue to the owner of the business. Retained earnings is a portion of net income not paid out to investors in a business.

Financial statement:-

                              Financial statements are those statements which gives the financial position of the business as to what had earned (profit or loss). They are finalised normally on yearly basis ...