Chapter 4, Problem 1QY

The __________ represents the sequence of steps in the accounting process.

1. a. fiscal year
2. b. fiscal period
3. c. accounting cycle
4. d. work sheet

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Accounting cycle: The whole process of identifying, sorting, analyzing, and recording the transactions, journalizing the transactions, posting the entries, preparation of trial balance, updating the adjustments in worksheet, preparing financial statements, and closing the books, is referred to as accounting cycle.

Justification for correct answer: Accounting cycle is the complete process of recording transaction, journalizing, posting, preparation of financial statements. Hence, option (c) is correct.

Justification for incorrect answers:

• Option (a) is incorrect because fiscal year is the accounting period of a company in which a public company reports or covers its financial statements in the 12 consecutive months.
• Option (b) is incorrect because fiscal period is the period in which a company completes its accounting cycle in the 12 consecutive months.
• Option (d) is incorrect because worksheet is an accounting tool that help accountants to record adjustments and up-date balances required to prepare financial statements.

Conclusion

Therefore, option (c) is correct answer.