The Sixth and Final Step in the Accounting Cycle Involves

question 126

Multiple Choice

The sixth and final step in the accounting cycle involves

• A) performing a trial balance to verify that the accounting statements are internally consistent.
• B) auditing the books to ensure that they were prepared according to generally accepted accounting principles.
• C) preparing the income statement.
• D) analyzing major accounting statements to evaluate the financial condition of the firm.

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Definitions:

Product Price

The financial cost of obtaining a product or service.

Marginal Revenue Product

The supplementary income realized by the application of one more unit of a resource, like labor or capital.

Labor

The engagement of human physical strength and intellectual power in producing goods and offering services.

Additional Revenue

The increase in total revenue that results from selling an additional unit of a product or service.