This involves selecting economic events that are relevant to a particular business transaction.

• A. Selecting events
• B. Identifying
• C. Analyzing
• D. Recording

Answer: (B)

The main idea is recognizing which economic events are relevant to a business transaction. In the accounting process, you start by identifying events that have financial impact—these are the events that could affect assets, liabilities, or equity. This step is essential because it distinguishes meaningful transactions from ordinary activities and sets up what will later be analyzed for measurement and then recorded. Analyzing and recording come after this identification: you determine the monetary effects of the identified events and then enter them into the books. Selecting events sounds similar, but the established term emphasizes the act of recognizing which events actually matter to the financial statements.