Enter Data Into an Accounting System
The first step of the traditional accounting cycle is to collect and enter data from business transactions.
Data entered into the accounting cycle includes all transactions a manual or computerized accounting system captures.
For example, a company provided services to a client and produced an invoice for $1,000. This transaction is entered in the accounting records. A business owner withdraws $100 from the business; the accounting records should show this transaction as well.
Accounting books include salaries and taxes because they are real, measurable, and directly related to the firm.
On the other hand, accounting books do not include unemployment increases or decreases because the information is general, not measurable, and does not directly relate to the firm.
