When is an Accounting Cycle Like a Unicycle?

Alex Toms of Sydney, Australia demonstrates st...

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What is an accounting cycle?

You may have asked yourself this question at some point in your business career.  The next question may have been why do I need to know this?

An accounting cycle is not like other cycles including life cycles and earth cycles.  But it can become like a unicycle which requires great balance, trial balance that is.

OK, enough of my accounting wit.  The accounting cycle is circular. The process of recording financial transactions and producing financial statements generally follows a series of activities. Each transaction is recorded in some form of accounting journal whether manually or electronically. The journal entries become the source to produce the accounting ledger which shows the cumulative debits, credits and balance for each account. The ledger drives the trial balance to root out any entry errors. The balance sheet, income statement and cash flow statement are prepared using the entries in the ledger. The accounting cycle then starts over with the next set of transactions.

That’s the high level picture of the accounting cycle that is essential for business executives to know and understand.

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About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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