Final answer:
The statement is false. Adjustments are made before closing the books to ensure that all transactions are accounted for accurately in the financial statements, and then the books are closed.
Step-by-step explanation:
The statement that a company normally closes its books and then adjusts its records to update the account balances before preparing the financial statements is false. The correct order of the accounting cycle begins with the company recording transactions as they occur over the accounting period.
At the end of the period, the company makes adjustments to the accounts to record expenses that have been incurred but not yet paid or recorded and income that has been earned but not yet received. These adjustments are made prior to closing the books. Once all adjustments are made, the company can then prepare the financial statements, and only after the financial statements are prepared and reviewed does the company close its books by zeroing out temporary accounts to start the new accounting period.