Accounting Cycle for Start-Up Businesses - This is what it is.

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Accounting Cycle for Start-Up Businesses – This is what it is. This is how to do accounting for small business for startups. It’s also how to set up accounting books for small businesses. That is what this accounting cycle for start-up businesses is all about. It’s to enable small businesses and startups to keep simple record keeping. Read more about Accounting Cycle for Start-Up Businesses – This is what it is.

Therefore, are you one of those who do not see the need to engage even an accounts clerk, these are what to do to help yourselves. Find time to visit our other topics in this series – Basic accounting for small business and what GAAP means and works

As a matter of fact, for most new businesses, office support processes like accounting are last on the list. In fact, the first thing in mind is setting up the products or services, pricing, payroll, and any number of other priorities. Financial record-keeping is always the last thing. Yes, setting up your business is understandable. But ignoring financial records won’t last for long.

Founders Need it:

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As a matter of fact, any business that wants to survive has to have a plan for financial record keeping. That probably may mean hiring a professional, but founders also need to know the basics. So that even if you haven’t gotten any clue where to start, you’ll need to figure it out quickly. Then, read more about Accounting Cycle for Start-Up Businesses – This is what it is.

That is why we’re here to help. Therefore, this article is full of sound accounting advice for startups. You’ll find all the most important terms and processes you need to know. That’s how to be in charge of your business.

The General Meaning of Accounting Cycle for Start-Up Businesses – This is what it is.

The accounting cycle is the collective process of recording and sorting out a business’s financial transactions. It; is a system that ensures that your business financial statements are prepared accurately. It also shows that the reports prepared are true reflections of the business’s financial position. It is considered a cycle because the workflow is circular. That means it covers and links one accounting period to the next.

The Accounting Cycle Process:

In this post, we present the full accounting cycle which consists of nine steps. This follows as it has always been before the introduction of accounting software which now processes many of these steps simultaneously. Here’s a look at the steps in the accounting cycle:

Transactions
Journal entries
Posting from the journal to the general ledger
Trial balance
Adjusting entries
Adjusted trial balance
Financial statements
Closing entries
Post-closing trial balance
Read more about Accounting Cycle for Start-Up Businesses here – This is what it is.

Transactions
The accounting cycle starts with transactions. This means that every time sales are made, an asset is purchased, products are returned or debt is paid, the accounting cycle begins. In fact, every financial activities that involve the exchange of business assets are considered a transaction.
Journal entries
A journal is a physical record or digital document kept as a data, spreadsheet, or book within the company’s accounting records. When a financial transaction is made, a bookkeeper records it as a journal entry. If the income or expense affects one or more business accounts, the journal entry will reflect that as well. Journal is a preliminary book. It’s like a note or diary keeping with narratives. By this every transaction movement is recorded, so that this record is reviewed from time to time even by auditors. Read more about Accounting Cycle for Start-Up Businesses – This is what it is.
Posting from the journal to the general ledger
Furthermore, all information recorded in this Diary-like book is posted to the general ledger. The general ledger contains the account information that is needed to create the company’s financial statements. The transaction data recorded in the general ledger is classified according to the type of expenses, revenues, shareholder’s equity, liabilities, and assets.

Accounting Cycle for Start-Up Businesses – This is what it is.

Trial balance
When the business transactions are summarized or closed in the general ledger, the accountant creates a trial balance. This is the report of every ledger account’s balance. This is done periodically. That is at the end of every reporting period, which may be monthly, quarterly, or yearly. The trial balance ensures that entries in the bookkeeping system are mathematically correct. The trial balance is carefully reviewed to make sure there are no errors. And where errors exist, they are adjusted by adding necessary entries.
Adjusting entries
These are adjusted entries, They are entries to take into account deferrals and accruals that have affected the final balances of accounts on the general ledger. These adjustments are made to make sure that the reported results are consistent with the financial position of the company before financial statements are made.
Adjusted trial balance
When all adjustments are made in the trial balance, it produces the adjusted trial balance. This is the most accurate record of a company’s financial transactions.

Accounting Cycle for Start-Up Businesses – This is what it is.

Financial statements
With the adjusted trial balance, the accountant prepares the cash statement, income statement, and balance sheet. These show the company’s financial condition, results, and cash flow.
Closing entries
At this stage, the accountant moves data from temporary accounts to permanent accounts on the balance sheet. Temporary accounts include expenses, revenues, and dividends. These accounts must be closed (reduced to zero) at the end of the accounting period to prepare them for the next period of transactions. Read more about Accounting Cycle for Start-Up Businesses – This is what it is.
Post-closing trial balance
The post-closing trial balance is the final step of the accounting cycle. This is the next accounting year opening balances. At this stage, the accountant checks the debits and credits match after closing entries are made. They also make sure that the trial balance only contains permanent accounts, since temporary accounts are already reduced to zero.

Conclusions: Accounting Cycle for Start-Up Businesses – This is what it is.

Finally, this is how GAAP works for Start-up Entrepreneurs. Both young start-up and existing entrepreneurs need to understand the principles of GAAP to be able to o their business well. This is because GAAP promotes good Business Model and management of Funds,

Finally again, tis is Accounting Cycle for Start-Up Businesses – This is how it works. Business founders should know these things. If you enjoyed this post, it’s time to copy it for academic purpose and for your continuous reading. If you bookmark it it’s better. That will also enable you share to reach your friends. Thanks for reading through Accounting Cycle for Start-Up Businesses – This is what it is.

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Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.