Question

Once a trial balance has been prepared, the next step of the accounting cycle involves: a. Classifying the transactions into logical categories. b. Preparing financial statements such as the balance sheet, income statement, and statement of cash flows. c. Completing a balance sheet and ratio analysis. d. Posting the information to the correct ledger accounts.

Answer 1

Answer:

The correct answer is letter "B": Preparing financial statements such as the balance sheet, income statement, and statement of cash flows.

Explanation:

A trial balance is a worksheet listing the debit and credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all the credits. Since the trial balance is a list of all the accounts it serves as an accuracy check before the company prepares the financial statements including the Balance sheet, Income and Cash Flows Statements.