The accounting cycle requires three trial balances to be prepared. In what order should they be prepared?

Question

The accounting cycle requires three trial balances to be prepared. In what order should they be prepared?

BlackTom AI · Accepted Answer

The unadjusted trial balance is prepared first, followed by adjustments, and then the post-closing trial balance.

1. Relevant knowledge points and concepts
- Trial balances are lists of ledger account balances used to check debits equal credits.
- Unadjusted trial balance: prepared after posting journal entries for transactions but before any adjusting entries; shows initial ledger balances.
- Adjusting entries: record accruals, deferrals, depreciation, and estimates to match revenues and expenses to the period; these are posted to update account balances.
- Adjusted trial balance: produced after posting adjusting entries; used to prepare accurate financial statements.
- Closing entries: transfer temporary account balances (revenues, expenses, dividends) to retained earnings.
- Post-closing trial balance: prepared after closing entries; includes only permanent accounts (assets, liabilities, equity) and verifies debits equal credits after closing.

2. Step-by-step reasoning process
- Step 1: Prepare the unadjusted trial balance using ledger balances after initial journal entries.
- Step 2: Identify and record adjusting entries (accruals, deferrals, estimates); post them to ledger accounts.
- Step 3: Prepare the adjusted trial balance reflecting updated balances; use it to prepare financial statements.
- Step 4: Prepare and post closing entries to zero out temporary accounts.
- Step 5: Prepare the post-closing trial balance to confirm the ledger is in balance and only permanent accounts remain.

3. Intermediate steps (procedural, since no numeric calculations here)
- List ledger balances → unadjusted TB.
- Post adjusting entries → recompute balances → adjusted TB.
- Post closing entries → update balances → post-closing TB.

4. Why the correct answer is correct
The adjusted trial balance must reflect adjustments before preparing financial statements and before closing temporary accounts. Closing entries require the adjusted balances, so the post-closing trial balance can only be prepared after closing. Thus the chronological and logical order is unadjusted → adjusted → post-closing.

5. Why the other choices are incorrect
- "unadjusted, post-closing, adjusted": impossible because post-closing comes after adjustments and closing.
- "post-closing, adjusted, unadjusted" and "post-closing, unadjusted, adjusted": both place post-closing first, which is illogical and violates the flow of recording adjustments and closing entries.

6. Conclusion
The correct sequence is unadjusted, adjusted, post-closing, which matches the provided answer.

The accounting cycle requires three trial balances to be prepared. In what order should they be prepared? 单项选择题

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