Question

Discussion Post Thread View Nest View Select User Discussion Post 4:Understanding the Steps in the Accounting Cycles Why is it important for students taking principles of financial accounting to understand and follow the steps in the accounting cycle? Please respond to this question with supporting arguments. Then review two classmates' responses and comment on whether you agree or disagree with each of them and why. Your post should be exactly 150 words. Dostad Rvs Ashford Chea

Answer 1

The accounting cycle is the holistic process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements, to closing the accounts. One of the main duties of a bookkeeper is to keep track of the full accounting cycle from start to finish. The cycle repeats itself every fiscal year as long as a company remains in business. To fully understand the accounting cycle, it’s important to have a solid understanding of the basic accounting principles. You have to know about revenue recognition (when a company can record sales revenue), the matching principle (matching expenses to revenues), and the accrual principle. These fundamental concepts will enable you to construct an income statement, balance sheet, and cash flow statement, which are the most important steps in the accounting cycle.