Definition of the Accounting Cycle
Before knowing the meaning of the accounting cycle, let us first understand the definitions of each word, namely cycle and accounting. In KBBI (Big Indonesian Dictionary), the cycle is a round of time in which there are a series of events or events that repeat periodically.
Whereas accounting is an absorption language taken from the word accountancy or accounting namely a process to identify, analyze, record, classify, present and process data relating to transactions or finance so that it is easily understood and can be used in decision making.
So, the notion of accounting cycles ( accounting cycle ) is a series of processes in the preparation of financial transactions using rules and principles covering the scope of accounting for a certain period.
Later, financial transactions that occur in one period certain (for example: 1 year) will be summarized in the form of financial statements that can be di accountability and can be used to take a decision related to business operations.
The following is an understanding of the accounting cycle according to several experts from within and outside the country, including the following.  According to Indra Bastian in his book "Public Sector Accounting Systems", the accounting cycle is the term istematics that is used in recording financial transactions, summaries and financial statements.
In his book  entitled "Regional Accounting Regional Financial Accounting Region", Abdul Halim said that the accounting cycle is the stages contained in the accounting system.
Winwin Yadiati and Ilham Wahyudi in his book entitled "Introduction to Accounting" said that the meaning of the cycle  accounting is a collection of stages in recording all business transactions until produces output in the form of financial statements for an organization in a certain period.
Understanding the accounting cycle according to Achmad Tjahyono and Sulastiningsih in his book " Introduction to Integrated Accounting "is the steps used in formal accounting, starting from from the process of analysis of business transactions, taking notes in a journal book, to ending with a process preparation of a list of balances after closing.
According to Soemarso SR, the definition of the accounting cycle is a stage of several activities, starting from the occurrence of transactions to the preparation of financial statements so that they are ready to be used in recording subsequent period transactions that occur repeatedly and continuously.
C. Rollin Niswonger, Carl S. Warren, James M. Reeve, Philip E. Fess, defines the accounting cycle (accounting 1945] as a major procedure that uses accounting principles to process transactions that occur during a period.  Stages of the Accounting Cycle
Basically, each company has different stages of the accounting cycle. For example, service companies have cycle stages that tend to be simpler than goods companies.
That is because service companies only have records in the form of transaction reports, while goods companies will have records of the cost of goods provided, prices of goods sold up to sales transaction report.
However, it is important to remember that the accounting cycle is based on 3 general stages, starting from the recording and classification of financial transaction phases, summarizing the financial statements (overview) and financial statement formulation ( financial report ). This is in accordance with the opinion expressed by Michell Suharli.
1. Stages of Recording and Classification of Evidence of Financial Transactions
In the first stage, the activities carried out relate to the collection of data originating from transaction data that has been collected during a certain period. There are several steps included in this first stage, including the following:
A. Identifying and Analyzing Proof of Transactions
The first step you can do is identify transactions. As an accountant, you must record what transactions have been carried out in one period.
The type of transaction that you identify is a transaction that can affect the company's financial position, have evidence of each transaction that occurs. Some proof of transactions such as receipts, notes, invoices, proof of cash in / out and so on. That way, you can account for the identification of transactions objectively.
Next, you can analyze the evidence of the transaction that has been identified. The analysis in question is by separating the evidence of transactions based on their respective groups. For example, grouping it into internal or external transactions of the company, based on date, number and so on.
B. Transferring Proof of Transactions into a Large Journal
You can record the transactions that have been analyzed regularly in a journal. The definition of the journal itself is an activity to summarize or record transactions that occur during a periodic one. Later, this journal will be used as a basis for determining the profit and loss reports experienced by the company.
2. Stages of Summarizing Financial Statements
This second stage relates to summarizing activities of transaction data that have been collected previously. The steps included in the overview stage include:
A. Arranging a Balance Sheet
A trial balance is a list of all information from an account along with total balances sourced from major journals and arranged systematically based on a certain period.
Later, this trial balance is used to see the balance between credit and debit amounts in each account recorded in the journal. If the amount of debit balance is different from the amount of credit, then the trial balance becomes unbalanced. Thus, your task is to examine errors that occur before the preparation of financial statements.
B. Adjusting Journal (Adjusment Entries)
The next step is to adjust the journal, namely by making corrections or adjusting the data records that have been made with the actual data.
In the sense that if there are still transactions that have not been recorded or there are errors, then you can reorder in a settlement journal. There will be a change in the nominal amount. All you have to do is adjust the value of the balance by adding up or reducing the account balance contained in the trial balance.
C. Arranging a Worksheet (Balance Sheet)
In general, this balance sheet is made based on data in the trial balance with the data contained in the adjusting journal. The purpose is that you can obtain information regarding profit and loss, changes in capital and balance sheet.
3. Stages of Formulating Financial Statements
The steps included in the formulation stage as explained below
A. Compiling Financial Statements
After completing the lane balance sheet, you can already formulate the financial statements. The contents of the financial statements, namely:
- Income statement (income statements ) describes the calculation of income or all costs generated by the company in a certain period so as to produce information about the value profit and loss
- Reports of changes in capital (e quity statements describe capital changes that have occurred.
- Balance Sheet (b  alance sheets ) the financial statement section that describes the financial position of the company such as assets (debt, assets), debt ( l iabilities), 1945, and capital (equity) that occurred in certain periods.  Cash flow report (c ash flow statements ), describes the flow of incoming / outgoing data produced by the company in one accounting period.
B. Compiling the Closing Journal
The final step is the financial statements will be closed by the closing journal, such as income, expense / expense accounts, and profit and loss accounts. It is intended that the period financial statements are not mixed with the next period so that it closes by making zero on the related balance.
Example of the Accounting Cycle
Let's look at the following illustration to find out the settlement in each stage of the accounting cycle. Ms. Eka will open a "Baby Care" baby shop in May 2003. This is the type of transaction that occurred during May 2003:
- May 1: Ms. Eka invested Rp. 8,000,000, –
- May 3: Buy store equipment in cash of Rp. 450,000, –
- May 5: Buying equipment on credit from the Wisma Jaya store is Rp. 600,000, –
- May 8: Receive money from customers for a week of Rp. 300,000, –
- May 15: Paid electricity and telephone expenses of Rp. 800,000, –
- May 20: Paying a monthly employee salary of Rp. 400,000, –
- May 22: Ms. Eka as a shop owner takes money for personal needs of Rp 250,000 –
- May 25: Received a job from a customer in cash of Rp. 300,000, – on a credit of Rp 150,000, –
- May 28: Received a bill from a subscription dated 25/12 of Rp. 150,000, –
- May 31: Paying Rp. 270,000, – one-year insurance premium
Put the transaction into a general journal form.
accounting. Hopefully the above article is useful and increases your insight to become an accountant. Thank you and see you in the next article.
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