What is the first step in the accounting cycle?
A) Analyze the financial statements.
B) Prepare the financial statements.
C) Analyze the business transaction documents.
D) Prepare the trial balance.

Question

Quizplus · Accepted Answer

The first step in the accounting cycle is to analyze the business transaction documents, such as receipts and invoices. This involves identifying the accounts affected and the amount of the transaction. Only after these transactions have been recorded can the financial statements be prepared and the trial balance be created. Therefore, option A and B are incorrect, and option D cannot be the first step in the accounting cycle as it requires the completion of previous steps.

What Is the First Step in the Accounting Cycle