What is a step in the accounting cycle?

Question

Researching demographics

Making five-year projections

Summarizing the effects of transactions

Forecasting sales

Answer 1

A step in the accounting cycle is summarizing the effects of transactions.

The accounting cycle involves a series of steps that organizations use to identify, analyze, and record financial transactions. Summarizing the effects of transactions typically occurs after recording the transactions in the appropriate journals and involves preparing trial balances, financial statements, and other reports that summarize the organization’s financial performance and position.

The other options listed (researching demographics, making five-year projections, and forecasting sales) are more related to business planning and analysis rather than the steps explicitly involved in the accounting cycle.