Please Review the Accounting Cycle

Which step in the process is completed after transactions? Record adjusting entries

And what is the purpose in completing that step after transactions in the accounting cycle? To update account balances and reflect an accurate financial position

Question

Please Review the Accounting Cycle

Which step in the process is completed after transactions? Record adjusting entries

And what is the purpose in completing that step after transactions in the accounting cycle? To update account balances and reflect an accurate financial position

BlackTom AI · Accepted Answer

Question restatement: This item asks to identify the step in the accounting cycle that is completed after transactions and to state the purpose of performing that step. The two options provided are:

- Record adjusting entries
- To update account balances and reflect an accurate financial position

Option 1: Record adjusting entries
This choice is correct because in the accounting cycle, after transactions have been recorded and posted, the next step is to prepare and record adjusting entries. Adjusting entries are used to ensure that revenues and expenses are recognized in the appropriate accounting period, and that asset and liability accounts reflect the true balances at period end.

Option 2: To update account balances and reflect an accurate financial position
This option describes the purpose of the adjusting entries. The primary aim of adjusting entries is to bring account balances up to date before financial statements are prepared, thereby reflecting an accurate financial position at the end of the period. Without these adjustments, reported figures could be misstated due to accruals, deferrals, and timing differences.

Why these two together make sense in the context of the question: The question ties the action (the step) to its purpose. The action is recording adjusting entries, and the purpose is updating balances to reflect the accurate financial position. In practice, both statements align: the step is adjusting entries, and the purpose described is precisely what those entries achieve. There are no other options provided to mislead, and the sequence is consistent with standard accounting cycle flow (journal entries, posting, adjusting entries, adjusted trial balance, financial statements, closing entries).

If you were thinking there might be a separate step name and a separate purpose, note that in this case the two items are linked, with the step and its purpose stated in tandem, which reinforces the correct understanding that adjusting entries are both the step and the mechanism for updating balances to reflect the accurate financial position.

25/SP-ACC-220-1M3, ACC-220-103 Learning Resources Quiz Chapter Three - Adjusting Entries

Please Review the Accounting Cycle Which step in the process is completed after transactions? Record adjusting entries And what is the purpose in completing that step after transactions in the accounting cycle? To update account balances and reflect an accurate financial position

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