The Accounting Cycle

The Accounting Cycle

June 17, 2013

Introduction

Finances are an intricate part of any business. It is obviously important that finances be closely monitored to ensure financial stability, and the way an organization does that is with an accounting cycle. The accounting cycle is a step-by-step process that allows a business’s accountant to systematically record transactions, prepare financial statements, and close the accounts utilized by the company over a period of time; Camden County Community College is no exception. The accounting cycle is just as important to CCC as it is to any other organization of its kind. Below is a description of the accounting cycle and how Camden County College utilizes each step.

About the Accounting Cycle

The accounting cycle consists of eight steps that begin with the identification of transactions and ends with the closing of any nominal accounts. These processes serves as a blue print for accountants to record transactions and prepare financial statements (Kieos, Warfield, & Weygandt, 2012). After the initial identification of transactions, it is time to journalize any cash receipts, cash distribution, purchases, sales, and any other special entries the company incurs. Then the journalized entries are transferred to a general ledger on a monthly basis, and subsidiary legers on a daily basis. After the posting to the ledger, a trail balance is prepared. Adjustments on accruals are necessary to for next part of the cycle which is the adjusted trial balance. The adjusted trial balance is what Camden County College accountants use to prepare the financial statements. The final step in the accounting cycle is to close the accounts