The Accounting Cycle Explained, Step by Step
The accounting cycle is the sequence of steps that turns day-to-day transactions into accurate financial statements. Understanding it lets you read your company's financial position with confidence.
Double-entry: debit and credit
Every transaction is recorded in two equal sides: a debit and a credit. Assets and expenses increase with a debit; liabilities, equity and revenue increase with a credit. This is a general accounting principle that any sound system follows.
From journal entry to statements
The cycle starts with a journal entry, then posting to the ledger, a trial balance, adjusting entries, and finally the income statement and balance sheet. In Zervixo the journal entries are created automatically from each sale, purchase or payment, so these steps happen without manual data entry.
Frequently asked questions
What is the difference between debit and credit?
Debit and credit are the two sides of every entry. Debits increase assets and expenses; credits increase liabilities, revenue and equity; total debits always equal total credits.
See how Zervixo does this in practice
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