Which of the following is considered a planning activity in financial accounting?

• A. Setting organizational goals for the upcoming year
• B. Recording daily sales transactions
• C. Auditing the company's internal controls
• D. Preparing the year-end financial statements

Answer: (A)

Verified step by step guidance

1. Understand the concept of planning activities in financial accounting. Planning activities involve setting objectives and strategies for the future, focusing on decision-making and goal-setting rather than recording or auditing past transactions.
2. Analyze each option provided in the problem to determine whether it aligns with the definition of planning activities.
3. Option 1: 'Setting organizational goals for the upcoming year' is a forward-looking activity that involves establishing objectives, which is a key characteristic of planning.
4. Option 2: 'Recording daily sales transactions' is an operational activity focused on documenting past events, not planning for the future.
5. Option 3: 'Auditing the company's internal controls' and Option 4: 'Preparing the year-end financial statements' are retrospective activities aimed at evaluating or summarizing past performance, not planning.