The accounting cycle at Blowplast consists of a straightforward ten-step process for carrying out accounting duties. It offers a precise framework for the documentation, evaluation, and summarization of the financial activities of our company.
Keeping the cycle organised throughout aids in maintaining overall effectiveness. Depending with the reporting need, Blowplast’s accounting cycle times will vary. Although we may place a stronger emphasis on monthly or annual results, we aim to analyse our performance on a weekly or monthly basis.
These accounting steps are frequently made possible by an accounting software and a technology program. However, knowing and applying the steps manually is also necessary when working on books that require little technical assistance.
See below the ten steps of our accounting cycle.
The first thing we do is identify transactions. Normally, we have numerous transactions that must be properly recorded on the company’s books. Record keeping is essential at Blowplast for all types of transactions, especially sales transactions and expenses incurred.
We use journal entries to accurately record every business transaction within the company. If there are multiple accounts, the journal entry then will include all relevant information.
Once a transaction has been recorded as a journal entry, we then post it to a general ledger account. The general ledger summarizes all accounting activities. This enables our accountants to keep track of account-by-account financial positions and statuses.
Making sure the total credit balance and total debit balance are equal is the goal of this step. We do this to make sure the numbers remain accurate. A trial balance informs the company of the unadjusted balances in every account. The unadjusted trial balance is then moved to the next stage for testing and analysis.
To confirm that debits and credits are equal, a worksheet is created and used. Worksheets simplify the work to be done at the end of the accounting period. It helps in avoiding entering errors in our accounting records.
In addition to identifying any errors, adjusting entries may be needed for revenue and expense matching. Adjusting journal entries ensures that tasks are recorded accurately and that no expenses are paid for before they are incurred.
This process helps us verify that the total debit account balances match the credit account balances. It’s important that the totals for both debit and credit balances match.
Following the completion of all adjusting entries, we generate our financial statements. Financial statements are important as they provide information about our company’s revenue, expenses, profitability, debt load, and the ability to meet short-term and long term financial obligations.
The purpose of closing entries is to ensure that there is a new start from the beginning of a new period. This also enables us to ensure that data for each period is accounted for separately.
Post-closing trial balance helps us verify that these accounts have zero balances. It verifies that debits are equal to credit amounts after the closing of the entries which enables us to start the next accounting periods with correct amounts.
Accounts Receivables Manager