The accounting equation must remain in balance
A) throughout each step in the accounting cycle.
B) only when journal entries are recorded.
C) only at the time the trial balance is prepared.
D) only when formal financial statements are prepared.

Question

Quizplus · Accepted Answer

The accounting equation (Assets = Liabilities + Equity) must remain in balance throughout each step in the accounting cycle, including recording journal entries, posting to the ledger, preparing a trial balance, preparing financial statements, and closing the books. Maintaining balance ensures the accuracy and integrity of financial information.

The Accounting Equation Must Remain in Balance