Which of the statements below explains the accounting cycle?

BlackTom题目解析

Question

Which of the statements below explains the accounting cycle?

BlackTom题目解析

BlackTom AI · Accepted Answer

Question restated: Which of the statements below explains the accounting cycle? BlackTom题目解析

Option 1: 'The accounting cycle refers to the work sheet used during the period to record adjustments and the post-closing trial balance.' This statement focuses specifically on worksheets, adjustments, and post-closing balances, but the accounting cycle encompasses all steps from transaction analysis to financial statement preparation, not only these particular tasks. It narrowse the concept too much and omits other essential steps such as journalizing, posting, and preparing interim statements.

Option 2: 'The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements.' This option captures the broader, iterative nature of the cycle, emphasizing that it recurs with each reporting period and includes the sequence of steps leading to financial statements, including analyzing, journaling, posting, adjusting, and closing.

Option 3: 'The accounting cycle is another name for the adjustment process at the end of the period.' This choice narrows the cycle to only the adjustments made at period end, ignoring numerous preceding and subsequent steps like transaction recording, posting to ledgers, and the closing process.

Option 4: 'The accounting cycle is another name for the closing process at the end of the year.' This statement reduces the cycle to the closing phase and neglects the entire sequence of activities before and during period-end adjustments and reporting.

Analysis of each option:
- For Option 1 (worksheet/adjustments/post-closing trial balance focus): While worksheets, adjustments, and post-closing trial balances are components of the cycle, they do not by themselves define the full accounting cycle. The cycle includes initial analysis of transactions, recording in journals, posting to ledgers, preparing trial balances, making adjustments, preparing financial statements, and closing.
- For Option 2 (repeated each reporting period and steps to prepare financial statements): This aligns with the comprehensive view of the accounting cycle, acknowledging its periodic repetition and the sequence of steps that culminate in financial statements.
- For Option 3 (only the adjustment process): This misstates the cycle as solely about end-of-period adjustments, omitting the many other essential steps before and after adjustments.
- For Option 4 (only the closing process): This overemphasizes the final phase and neglects the broader, ongoing process that begins with recording transactions and ends with producing and reviewing financial statements.

In summary, the statement that best explains the accounting cycle is the one describing its repeated nature in each reporting period and its role in the steps taken to prepare financial statements, while the other options describe narrower components or phases that do not capture the full cycle.

Which of the statements below explains the accounting cycle? BlackTom题目解析

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