Which of the following is the usual final step in the accounting cycle?

• A. Preparing closing entries
• B. Posting adjusting entries to the ledger
• C. Journalizing transactions
• D. Preparing a post-closing trial balance

Answer: (D)

Verified step by step guidance

1. Understand the accounting cycle: The accounting cycle is a series of steps followed to record, classify, and summarize financial transactions. It typically includes identifying transactions, journalizing, posting to the ledger, preparing a trial balance, making adjusting entries, preparing financial statements, and closing the books.
2. Review the purpose of closing entries: Closing entries are made to transfer balances from temporary accounts (e.g., revenues, expenses, and dividends) to permanent accounts (e.g., retained earnings). This ensures that temporary accounts start with a zero balance in the next accounting period.
3. Learn about the post-closing trial balance: After closing entries are made, a post-closing trial balance is prepared. This trial balance includes only permanent accounts (assets, liabilities, and equity) and ensures that the ledger is balanced after closing entries.
4. Understand why preparing a post-closing trial balance is the final step: The post-closing trial balance confirms that all temporary accounts have been closed and the accounting records are ready for the next period. It is the final step because it ensures the accuracy and completeness of the accounting cycle.
5. Connect the steps logically: Preparing closing entries comes before the post-closing trial balance because the balances of temporary accounts need to be transferred to permanent accounts first. Posting adjusting entries and journalizing transactions occur earlier in the cycle, making the preparation of the post-closing trial balance the usual final step.