What is accounting cycle?

In accounting certain steps are to be followed which are repeated year after year. These are:

  • Recording of transactions and events in the books of accounts- journalising;

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  • Grouping of similar items and transferring to their respective account – posting;
  • Summarising the accounts – balancing;
  • Checking the arithmetical accuracy – preparing the trial balance;
  • Adjusting the unrecorded items – passing adjustment entries;
  • Closing books of account to find out the result – preparing final accounts.


All these above steps constitute accounting cycle.

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