Issuing financial statements is the first step in the accounting cycle.

Question

BlackTom AI · Accepted Answer

Re-expressing the prompt helps set the stage for evaluation: the statement claims that issuing financial statements is the first step in the accounting cycle, and the available options are True or False.
Option 1: True. This would assert that the act of issuing financial statements occurs at the very beginning of the accounting cycle. In practice, the accounting cycle starts with identifying and recording transactions, then posting to the general ledger, preparing an unadjusted trial balance, adjusting entries, preparing an adjusted trial balance, creating financial statements, and finally closing the books and preparing a post-clation trial balance. Since issuing financial statements comes after the preparation and adjustment stages, labeling it as the first step contradicts the standard sequence. Therefore this statement is incorrect because it misplaces the order of operations in the cycle.
Option 2: False. This option denies that issuing financial statements is the initial step. It aligns with the established sequence where the initial steps involve recognizing and recording transactions, not producing financial statements. The logical flow is to move from raw data gathering to summarized financial reporting through several intermediate steps. Consequently, this option correctly identifies the inaccuracy in the claim about the cycle’s starting point.
In summary, the reasoning hinges on the correct ordering of the accounting cycle steps, with issuing financial statements occupying a later phase rather than the first step, and hence the statement as a whole is not accurate.

VPAB13H3 F LEC01 Final Exam Quiz

Issuing financial statements is the first step in the accounting cycle.

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