Importance of Accounting Cycle

Here we discuss about the Importance of Accounting Cycle. If you want to know better understand this topic, then kindly read my article about “Steps in the Accounting Cycle". Through this Cycle, true and fair view of financial statements can be presented to the Users of Financial Statements (Investors, Banks, customers, Financial Institutions, Creditors, Suppliers and so on).

                      

                                      

                                    4 main Importance

ü  Company Businesses can easily check their performance through Income Statement or Statement of Comprehensive Income, Balance Sheet, Statement of Cash Flows and Statement of Changes in Equity. Ultimately, the weaknesses of company businesses can be lowered in this regard.

ü  It prevents the company businesses from mistakes, errors and frauds. For Instance, If any of the step will fail, then errors and frauds can be detected after conducting audit by Chartered Accountant.

ü  Due to this cycle, Computerized Accounting is possible through Accounting Software, like QuickBooks, Peachtree, Tally, Oracle and so on. Because there is Proper Management of Recording transactions.

ü  It is called the lifeblood because if any one step of these will fail the whole accounting processes will fail and does not show the accurate, reliable and true and fair view of Financial Statements.

So these are the some of the importance of Accounting Cycle.