The accounting cycle, also known as the accounting process or registration flow, is the period in which the Company records each transaction in a chronological and reliable manner in its respective Daily Book in order to analyze, prepare and prepare the financial information .
The accounting process is made up of all the steps that must be followed since an accounting event occurs until it is introduced into the system and, therefore, is reflected in the financial statements.
How is the accounting cycle?
The stages of the accounting cycle begin with the identification of the accounting fact , such as with a sale of merchandise. The next step is to generate an accounting document that supports this transaction and allows it to be reflected in quantified accounting in monetary units and with a specific date.
Once this document is generated (delivery note or invoice ) the operation is recorded in the Daily Book. At the end of the accounting cycle, which is usually from January to December, the transactions are transferred to the general ledger . After some regularizations (amortizations, reclassifications between short term and long term, calculation of the result, etc.) the accounting is closed to generate the final financial statements