The
Series of business transactions which occur from the beginning of an accounting
period to the end of an accounting period is referred any specific period of
time for which a summary of business’s transaction is prepared.
Steps
in Accounting Cycle:-
1.
Journalizing (Recording)
2.
Posting to Ledger (Classifying)
3.
Final Account (Summarizing)
Now
Explain Steps:-
1
Recording:- This is the basic function of accounting. All business
transaction, as evidenced by some documents such as Sale bill, Pass book,
Salary Slip ect are recorded in the books of account. This is called recording
process.
2. Classifying:-
All entries in the Journal or books of Original Entry should be posted to the
appropriate ledger accounts to find out at a glance the total effect of all
such transactions in a particular account.
3.
Summarizing:-
It is concerned with the preparation and presentation of the classified data in
a manner useful to the Internal a well as the external users of financial
statements. This process leads to the preparation of the following financial
statements:-
a) Trial
Balance
b) Profit
& Loss Account
c) Balance
Sheet
d) Cash
flow Statement.