NAFTrack Accounting Practice Test

What is the fourth step in the accounting cycle?

Prepare a trial balance Prepare post-closing trial balance Close temporary accounts Prepare financial statements

Correct Answer:

Prepare a trial balance

Explanation:

The step being tested is the order of the accounting cycle and where the trial balance fits in. After recording transactions and posting them to the ledgers, you prepare a trial balance to verify that total debits equal total credits and to summarize the balances of all accounts. This check is essential before making any adjusting entries, so the trial balance is positioned as the fourth step in the cycle. By confirming the ledger is in balance, you have a solid starting point for adjustments, then for preparing financial statements, closing temporary accounts, and eventually generating a post-closing trial balance.

Access more questions from this quiz

Continue to NAFTrack Accounting Practice Test for more practice questions and the full quiz experience.

Access More Questions