Understanding the accounting cycle is key to keeping your business financially healthy and compliant. At Positify.us, we simplify bookkeeping for small businesses by guiding you through each stage with clarity and precision. This lead magnet breaks down the six essential steps of the accounting cycle and shows how outsourced bookkeeping services can help you stay on track.
What Is the Accounting Cycle?
The accounting cycle is a systematic process that helps you track, record, and analyze every financial transaction your business makes during an accounting period. Following this cycle ensures that your records are accurate and your financial decisions are data-driven.
- Identify Transactions
This is the first and most critical step. You need to identify and collect all the financial transactions—sales, purchases, expenses, or income—that affect your business. - Record Transactions in a Journal
Log each transaction in your accounting journal in chronological order, including date, amount, and account affected. - Post to the General Ledger
Transfer your journal entries to the general ledger, categorizing them by account type for a comprehensive financial view. - Prepare a Trial Balance
Ensure that total debits equal total credits. This helps detect any data entry or categorization errors before generating statements. - Make Adjusting Entries
Update your records to reflect accruals, deferrals, and non-cash expenses to ensure the accuracy of your financial position. - Prepare Financial Statements
Use your adjusted trial balance to generate your income statement, balance sheet, and cash flow statement for internal analysis and external reporting.
Why Is the Accounting Cycle Important?
Following the accounting cycle ensures that your books are clean, compliant, and ready for audits, investors, or tax season. It gives you a clear view of your financial health and helps you make smarter business decisions.
Let Positify Handle the Cycle for You
Handling all six steps can be time-consuming—especially if you’re managing your business alone. That’s why small businesses trust Positify.us to manage their bookkeeping. We offer full-service bookkeeping, remote bookkeeping services, and outsourced bookkeeping services tailored to your needs. Let us take care of the numbers so you can focus on what you do best: growing your business.
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