Question

Which of the following steps must be completed before preparing the adjusted trial balance?

A. preparation of the closing entries
B. posting of journal entries to the accounts
C. preparing the post-closing trial balance
D. preparation of the financial statements
E. None of the above

Answer 1

The preparation of the closing entries must be completed before preparing the adjusted trial balance.

Step-by-step explanation:

The correct answer is A. preparation of the closing entries. The closing entries must be prepared and posted to the accounts before the adjusted trial balance can be prepared. The closing entries transfer the balances of temporary accounts (revenue, expense, and dividend accounts) to the retained earnings account, bringing the temporary account balances to zero at the end of the accounting period.

After the closing entries have been prepared and posted, the adjusted trial balance can be prepared. The adjusted trial balance lists all the accounts and their updated balances after adjusting entries have been recorded. It is used to ensure the equality of debits and credits before preparing the financial statements.

Therefore, options B, C, and D are incorrect because they are steps that come after the preparation of the adjusted trial balance.