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

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

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 business. That is what this accounting cycle for start-up businesses is all about. It’s to enable small businesses and startup keep simple record keeping. 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 the mind is set 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:

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 goten any clue where to start, you’ll need to figure it out quickly.

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 businesses financial transactions. It; a system that ensures that your business financial statements are prepared accurately. It also shows that the reports prepared are true reflections of business financial position. It is considered a cycle because the workflow is circular. That means is 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 was it has always been before the introduction of accounting software which now process many of these steps simultaneously. Here’s a look at the steps in the accounting cycle:

  1. Transactions
  2. Journal entries
  3. Posting from the journal to the general ledger
  4. Trial balance
  5. Adjusting entries
  6. Adjusted trial balance
  7. Financial statements
  8. Closing entries
  9. Post-closing trial balance
  1. 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 a business assets are considered a transaction.
  2. 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 movements are recorded, so that this record is reviewed from time to time even by auditors.
  3. 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 type of expenses, revenues, shareholder’s equity, liabilities and assets.

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

  1. Trial balance
    When the business transactions are summarized or closed at the general ledger, the accountant creates a trial balance. This is the report of every ledger account’s balance. This done periodically. That is at the end of every reporting period, which may be monthly, quarterly or yearly. The trial balance ensure that entries in 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.
  2. Adjusting entries
    These are adjust 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.
  3. 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.

  1. 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.
  2. 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.
  3. 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.
Accounting Cycle for Start-Up Businesses - This is what it is.

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

In conclusion, every thing you see in this list is very essential for smooth running of your business. So, they, are recommended topics that will aid you do your business properly. That’s why they re presented here as recommended topics.. In fact, you have to ensure you spend some time reading not less than two of them before you leave the page. Furthermore re other linked pages you must visit too. They are also here to support or give more explanations to the topic. Just click on them.

Conclusions:

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. And now, if you have questions or comments send them through the comment box bellow this post. Do well to follow u on any of our social media handles and in fact Like us. To contact us drop your phone number or email address in the comment box. And if you can call 09152153136 or email us via cfmclimited@gmail.com

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