Which of the following is the final step in the accounting cycle?
A)Prepare financial statements.
B)Close the accounts.
C)Prepare and adjusted trial balance.
D)Post the journal entries to the ledger.

Question

Quizplus · Accepted Answer

Closing the accounts is the final step in the accounting cycle, as it involves transferring all temporary accounts' balances (revenues, expenses, gains, and losses) to the permanent account (retained earnings). This helps in preparing the new fiscal year's financial statements adequately. Although preparing financial statements is also an essential step, it is done after closing the accounts. Preparing an adjusted trial balance and posting journal entries to the ledger are earlier steps in the accounting cycle.

Which of the Following Is the Final Step in the Accounting