For which step of accounting process the accountants of business entity prepare financial statements?
Correct answer: B. Communication of financial information
- A. Identification of economic event
- B. Communication of financial information
- C. Recording financial information
- D. Making decisions about business
Explanation
Financial statements are prepared to communicate summarized financial information to users, so their preparation belongs to the communication stage of the accounting process. Identification and recording occur earlier, while decision-making uses the communicated information.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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