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Which of the following statements is true of the accounting cycle?

a) It begins with financial statement preparation.
b) It includes only the recording of financial transactions.
c) It does not involve adjusting entries.
d) It ends with the post-closing trial balance.

User Bello Tomi
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1 Answer

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Final answer:

The true statement regarding the accounting cycle is that it ends with the post-closing trial balance, which confirms the balance of debits and credits after closing entries. option d is answer

Step-by-step explanation:

The correct statement concerning the accounting cycle is (d) It ends with the post-closing trial balance. The accounting cycle starts with the identification and recording of financial transactions. It encompasses the entire process from the initial transaction recording to the preparation of financial statements and ends with the post-closing trial balance, which is prepared after all adjusting and closing entries have been completed.

This final trial balance ensures that all debits and credits balance after the closing process, signifying the readiness for the new accounting period.

Adjusting entries are in fact a critical part of the accounting cycle, as they ensure that the revenues and expenses are recorded in the correct periods, thus (c) is incorrect. The cycle does not merely involve recording transactions, as suggested in (b), since it includes the preparation of financial statements and other processes. The accounting cycle does not begin with financial statement preparation, making (a) incorrect as this is one of the final steps. option d is answer

User Verheesj
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