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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Steps that begin with analyzing source documents and conclude with the post-closing trial balance are called the

(a) closing process.

(b) accounting cycle.

(c) adjusting entries.

(d) posting process.

To determine

Determine the steps that begin with analyzing source documents and conclude with the post-closing trial balance.

Explanation

Justification for the incorrect answer:

Option (a) is incorrect because closing the books of accounts is called as “closing process”. This consists of journalizing and posting the closing entries in order to get the balance of each account to next period.

Option (c) is incorrect because adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle

Option (d) is incorrect because posting process is a process of transferring the journalized transactions into the accounts of the ledger.

Justification for the correct answer:

Option (b)

Accounting Cycle: The accounting cycle refers to the entire process of recording the accounting transactions of an organization and then processing them. The accounting cycle starts when a transaction takes places and it ends at the time when these transactions are recorded in the financial statements of the company.

The steps of accounting cycle are as listed below:

Step 1: Analyze the business transactions...

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