Which of the following is the first step in the closing entries process?

In the closing entries process, the first step is to close revenues to Retained Earnings. This step involves transferring the total revenue amounts from the income statement to the Retained Earnings account in the equity section of the balance sheet. This process is crucial because it resets the temporary revenue accounts to zero for the new accounting period, allowing for a fresh start in capturing revenue for that period.

Closing revenues first is essential because it sets the stage for determining the net income or loss for the period, which will ultimately affect the Retained Earnings balance. After revenues are closed and the net income is established, the next logical steps involve closing expenses and dividends to ensure that all components of the income statement and any distributions to shareholders are accounted for in Retained Earnings.

This approach maintains the integrity of the accounting cycle by ensuring that all temporary accounts are properly reset, and it allows for an accurate reflection of the financial performance of the entity in the following period.