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

Question

Quizplus · Accepted Answer

The next step in the accounting cycle after preparing financial statements is to close temporary accounts, which includes transferring their balances to the retained earnings account. This step is necessary to prepare the accounts for the next accounting period. The options of preparing a work sheet, reversing entries, preparing a post-closing trial balance, and preparing an unadjusted trial balance are all steps that occur earlier in the accounting cycle.