Which Step in the Accounting Cycle Immediately Precedes Closing the Temporary

question 22

Multiple Choice

Which step in the accounting cycle immediately precedes closing the temporary accounts?

• A)Analyze transactions.
• B)Prepare an adjusted trial balance.
• C)Prepare financial statements.
• D)Record adjusting entries.

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Definitions:

Budgeted Income Statement

A financial statement forecasting the revenues, expenses, and net income for a specific period, based on proposed budgets and assumptions.

Contribution Margin Ratio

A financial metric that measures the proportion of sales revenue that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Sales

The total amount of revenue a company generates from the sale of goods or services before any expenses are deducted.

Margin of Safety

The difference between actual or expected sales and the break-even point, reflecting the cushion against a loss.