[amp_mcq option1=”Identifying an economic event or transaction” option2=”Preparing Journal” option3=”Posting entries to Ledger accounts” option4=”Making decisions about business” correct=”option1″]
The correct answer is: A. Identifying an economic event or transaction
An economic event or transaction is the first step in the accounting cycle. It is the event that causes a change in the financial position of a business. Once an economic event has been identified, it must be recorded in the journal. The journal is a chronological record of all economic events. After the economic event has been recorded in the journal, it must be posted to the ledger. The ledger is a book of accounts that contains all of the financial information about a business. The final step in the accounting cycle is to prepare financial statements. Financial statements are reports that provide information about the financial position, results of operations, and cash flows of a business.
Here is a brief explanation of each option:
- A. Identifying an economic event or transaction is the first step in the accounting cycle. It is the event that causes a change in the financial position of a business.
- B. Preparing Journal is the second step in the accounting cycle. It is the process of recording economic events in the journal.
- C. Posting entries to Ledger accounts is the third step in the accounting cycle. It is the process of transferring the information from the journal to the ledger.
- D. Making decisions about business is not a step in the accounting cycle. It is a decision that is made by management.