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Accounting Cycle

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How easy is it for an accountant to miss one of the nine steps of the accounting cycle? Would he/she have to start the whole process over again?

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Solution Summary

This solution is an explanation of the importance of the accounting cycle. It is an original response to a curious question posted by an accounting student. "How easy is it for an accountant to miss one of the nine steps of the accounting cycle? Would he/she have to start the whole process over again?" The solution explains in detail how each step in the accounting cycle leads to the next step and how each step depends on the completion of the previous step.

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The accounting cycle is the process by which companies produce their financial statements. Each step in the accounting cycle leads to the next step. That means each step depends on the completion of the previous step. Also the process allows for a checking system. If the beginning balance sheet is equal; assets equal liabilities plus equity, then the beginning balances in the ledger are correct. If the journal entries contain the proper amounts and debits equal credits, and the cash proves, then the journal is correct. This process continues on to the worksheet, where the total of the debit and credit columns ...

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