Financial Accounting Fill-in-the-Blanks Question: The process of preparing financial statements involves several steps. Consider a company named XYZ Inc. that is preparing its financial statements for the year ended December 31,20 .. In the first step, XYZ Inc. needs to gather all its financial transactions throughout the year. This involves collecting receipts, invoices, bank statements, and other relevant documents. This step is called Once all the financial transactions are gathered, XYZ Inc. needs to record these transactions in the general ledger. This process of recording transactions in the general ledger is known as After recording transactions, XYZ Inc. needs to prepare an unadjusted trial balance. The unadjusted trial balance is a list of all the company's accounts and their balances before any adjustments. This step is crucial to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance. If it doesn't balance, it indicates errors in the ledger. The unadjusted trial balance helps in identifying these errors before preparing the final financial statements. The unadjusted trial balance is usually prepared at the end of the Following the unadjusted trial balance, XYZ Inc. needs to make necessary adjustments to certain accounts. These adjustments could include recording accrued expenses, prepaid expenses, depreciation, and any outstanding revenues or expenses. These adjustments ensure that the financial statements reflect the company's true financial position. The adjusted trial balance is prepared after making these adjustments. Adjustments are necessary to comply with the Once the adjusted trial balance is prepared and the accounts are adjusted, XYZ Inc. can now proceed to prepare the financial statements. The financial statements include the income statement, balance sheet, statement of cash flows, and statement of changes in equity. The income statement shows the company's revenues, expenses, and net income or net loss for a specific period, often a year. The balance sheet provides a snapshot of the company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity. The statement of cash flows shows how cash and cash equivalents move in and out of the company during a specific period, while the statement of changes in equity details the changes in shareholders' equity accounts. These financial statements are prepared in accordance with the Finally, after preparing the financial statements, XYZ Inc. needs to analyze and interpret these statements to make informed business decisions. Financial ratios, such as liquidity ratios, profitability ratios, and efficiency ratios, are calculated to assess the company's financial performance. This analysis helps the company and its stakeholders in evaluating the company's financial health and making strategic decisions for the future. Understanding the financial statements is crucial for In summary, the process of preparing financial statements involves gathering financial transactions, recording them in the general ledger, preparing an unadjusted trial balance, making necessary adjustments, preparing the financial statements, and analyzing the financial results. This process is essential for ensuring accurate and reliable financial information, which is vital for the successful operation and growth of any business. Instructions: Fill in the blanks with appropriate terms related to the steps in the accounting process