Palmer Company is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, has prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:
A) Prepare an unadjusted trial balance.
B) Prepare a post-closing trial balance.
C) Prepare a work sheet.
D) Close temporary accounts.
E) Prepare reversing entries.

Question

Quizplus · Accepted Answer

The next step in the accounting cycle is to close the temporary accounts to the retained earnings account. This will reset the temporary accounts to zero balances for the next accounting period. Therefore, choice D is the best option. The other options are not necessary at this point in the accounting cycle as the adjusted trial balance has already been prepared, and the financial statements have been completed.

Palmer Company Is at the End of Its Annual Accounting