The First Step of the Accounting Cycle Is

question 41

Multiple Choice

The first step of the accounting cycle is:

• A) recording journal entries.
• B) posting to the ledger.
• C) preparing closing entries.
• D) analyzing business transactions.

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Definitions:

Levered Firms

Companies that employ debt (loans or bonds) in their capital structure alongside equity (stocks).

Unlevered Firms

Companies that operate without using debt or borrowed capital in their capital structures.

Financial Distress Cost

Expenses associated with a company struggling financially, including legal fees, restructuring costs, and impaired ability to conduct business.

Leverage

The use of borrowed capital or debt to increase the potential return of an investment.