From the course: Reading Corporate Financial Statements

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The role of the accounting cycle

The role of the accounting cycle

From the course: Reading Corporate Financial Statements

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The role of the accounting cycle

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- It's interesting how many of us have helped with end-of-year inventory counts. In fact, you probably have yourself. Those hours of intricately counting inventory are even more grueling because it usually happens in the middle of the night when business is slow. And it can feel like salt in the wound since it seems as though everyone must be at home comfortably sleeping. Verifying end-of-year inventory is just one process of many in the accounting cycle that we go through to ensure our financial statements are accurate and tell a true story of our organization's financial wellbeing. If we follow the accounting cycle, completing each step in order, we can be more confident the financial statements will tell an accurate story. Let's walk through the accounting cycle steps together. Financial statements would be empty without the occurrence of economic events, which make for a great starting point for the accounting…

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