What is full cycle bookkeeping?

Full-cycle bookkeeping is the entire bookkeeping process from start to finish. As most businesses use the double-entry method of bookkeeping, we will go over the full bookkeeping cycle for that method. The bookkeeping process starts with gathering and organizing all the financial transactions that occurred in a certain period (bookkeeping can be done daily, weekly, biweekly, monthly, etc. depending on your business’s needs). Once the transactions are organized, they are recorded in their corresponding journals as debits and credits. Once the entries in a journal are all recorded and the journal is confirmed to be balanced, the total for that journal is recorded in the General Ledger. The General Ledger is like a master document, summarizing all transactions into assets, liabilities, revenues, expenses, and owner’s equity. The General Ledger is then used to create the trial balance. The trial balance will tell you if everything is balanced or if there is an error somewhere. If there are errors, adjusting entries will need to be posted. Once the trial balance is finalized, it is used to produce the company’s financial statements, like the income statement (also known as the profit and loss) and the balance sheet. The final step in the bookkeeping process is to close the books for that specific period. After the books are closed, you would start the bookkeeping process all over again for the next period.