ACCOUNTING CYCLE Definition

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ACCOUNTING CYCLE is the sequence of steps in preparing the financial statements for a given period. It refers to the fact that because financial reports are given each period (usually a year) there are a set of steps (cycle) taken each period that result in the reports and preparation for the next period or cycle. The term cycle is used because every period there is a start and an end. The cycle usually starts with the budget, goes through the journal entries, adjusting entries, posting to the accounts, financial reports, and closings.

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SETTLEMENT DISCOUNT is the discount percentage offered for payment within the settlement period. Many vendors offer settlement discounts for early payment of invoiced amounts.

HELD TO MATURITY normally refers to a long term security (note or bond held for more than one year) that has a predetermined maturation event.

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