Which of the following statements about the accounting cycle is correct?
A) A trial balance is included in the full set of external financial statements.
B) If debits equal credits in the unadjusted trial balance, you have made no errors in preparing and posting journal entries.
C) The balances for each account reported on an unadjusted trial balance are determined by adding the amounts on the "+" side and subtracting the amounts on the "-" side of each ledger or T-account.
D) GAAP allows companies to choose between cash basis and accrual basis of accounting.

Question

Quizplus · Accepted Answer

The balances for each account reported on an unadjusted trial balance are determined by adding the amounts on the "+" side and subtracting the amounts on the "-" side of each ledger or T-account. This is the correct statement regarding the accounting cycle. The other statements are incorrect - A is false because trial balance is an internal document used to ensure that the bookkeeping system is in balance before the preparation of external financial statements, B is false because even if debits equal credits, there could still be errors in the posting of journal entries, and D is false because GAAP requires companies to use accrual basis of accounting.

Which of the Following Statements About the Accounting Cycle Is