Question

The sixth and final step in the accounting cycle involves:
a. preparing the income statement. analyzing major accounting statements to evaluate the financial condition of the firm.
b. performing a trial balance to verify that the accounting statements are internally consistent.
c. auditing the books to ensure that they were prepared according to generally accepted accounting principles.

Answer 1

Answer:

The answer is a. preparing the income statement. analyzing major accounting statements to evaluate the financial condition of the firm.

Explanation:

Accounting is not merely recording the transactions. It's about communicating correct and relevant information to the investors and the society to make better economic and investment decisions that will improve the conditions of the whole economy.

That is why after the preparation of the financial statements, the information are analysed to see if there are anything further to be found, clarified or corrected.