Question

Which of the following steps occurs only at the end of the year?

a)Obtain information about external transactions from source documents
b)Record adjusting entries and post to the general ledger accounts
c)Close the temporary accounts to retained earnings
d)Prepare the financial statements

Answer 1

The step that occurs only at the end of the year is closing the temporary accounts to retained earnings.

Step-by-step explanation:

The step that occurs only at the end of the year is c) Close the temporary accounts to retained earnings. This step is part of the closing process in accounting.

1. Obtain information about external transactions from source documents - This step occurs throughout the year whenever a transaction takes place.
2. Record adjusting entries and post to the general ledger accounts - This step occurs at the end of each accounting period to ensure that the financial statements reflect accurate and up-to-date information.
3. Close the temporary accounts to retained earnings - This step is performed at the end of the year to transfer the balances of temporary accounts, such as revenue and expense accounts, to the retained earnings account.
4. Prepare the financial statements - This step occurs after the closing process and involves creating the income statement, balance sheet, and statement of cash flows.