Accounting Cycle Quiz

What is the purpose of the accounting cycle?

• To calculate employee salaries

• To provide financial data to decision makers

• To analyze financial statements

• To prepare tax returns

Which step of the accounting cycle involves collecting and verifying invoices, receipts, and other paperwork?

• Analyzing the transactions and source documents

• Posting the general journal to the general ledger

• Journalizing entries into the general journal

• Preparing the trial balance and correcting entries

What is the purpose of journalizing entries into the general journal?

• To prepare the trial balance and correcting entries

• To analyze and review the financial statements

• To record each transaction in the general ledger

• To determine the accounts affected by each financial transaction

What is the purpose of posting the general journal to the general ledger?

• To analyze and review the financial statements

• To prepare the trial balance and correcting entries

• To record each transaction in the general ledger

• To determine the accounts affected by each financial transaction

What is the purpose of preparing the trial balance and correcting entries?

• To analyze and review the financial statements

• To balance all of the debits and credits within the general ledger

• To determine the accounts affected by each financial transaction

• To record each transaction in the general ledger

What is the purpose of preparing financial statements?

• To determine the accounts affected by each financial transaction

• To record each transaction in the general ledger

• To analyze and review the financial statements

• To provide a summary of the business's financial performance

Which financial statement shows the business's income?

• Balance sheet

• Statement of equity and retained earnings

• Income statement

• Cash flow statement

Which financial statement shows the business's assets, liabilities, and equity?

• Income statement

• Statement of equity and retained earnings

• Balance sheet

• Cash flow statement

Which financial statement shows the changes in the business's equity and retained earnings?

• Cash flow statement

• Balance sheet

• Statement of equity and retained earnings

• Income statement

Which financial statement shows the business's cash inflows and outflows?

• Statement of equity and retained earnings

• Balance sheet

• Income statement

• Cash flow statement