Future Business Leaders of America (FBLA) Accounting Practice Test

What is referred to as the series of accounting activities included in recording financial information for a fiscal period?

1. Accounting cycle

2. Financial reporting

3. Budgeting process

4. Bookkeeping

The correct answer is: Accounting cycle

The term that describes the series of accounting activities involved in recording financial information for a fiscal period is the accounting cycle. This cycle encompasses various steps, including identifying, recording, classifying, and summarizing financial transactions. It begins with the initial recording of transactions in journals and moves through the processes of posting to ledgers, preparing trial balances, adjusting entries, and ultimately generating financial statements. The accounting cycle is crucial because it organizes financial information in a manner that allows stakeholders to understand the financial health and performance of a business over a specific period. It ensures that accurate and complete financial data is available for analysis, decision-making, and reporting purposes. While financial reporting involves the presentation of this processed information to stakeholders, and the budgeting process entails planning future financial activities, both are outcomes of the underlying activities captured in the accounting cycle. Bookkeeping, on the other hand, refers specifically to the initial recording of financial transactions, which is just one aspect of the broader accounting cycle.