Final answer:
The statement that the last step in the accounting cycle is to prepare a post-closing trial balance, even if a company does not use reversing entries, is true. The post-closing trial balance ensures that the sum of debit and credit balances are equal, indicating the ledger is balanced for the new accounting period.
Step-by-step explanation:
The statement 'If a company does not use reversing entries, the last step in its accounting cycle is to prepare a post-closing trial balance' is True. In the accounting cycle, the final step involves verifying that the accounts are in balance after the closing entries have been posted. This step is known as preparing the post-closing trial balance. The purpose of the post-closing trial balance is to ensure that the sum of debit balances equals the sum of credit balances, indicating that the ledger is in balance and ready for the next accounting period.
Reversing entries are not always used by companies. They are optional and typically used to simplify the recording of transactions in the next period. Reversing entries are made at the beginning of a new accounting period to reverse certain adjusting entries made at the end of the previous period. However, whether or not a company uses reversing entries does not affect the necessity of preparing a post-closing trial balance. Hence, regardless of reversing entries, the post-closing trial balance remains as the last step in the accounting cycle.
To clarify, the accounting cycle follows a series of steps that begins with recording transactions and ends with a post-closing trial balance. The cycle includes journalizing transactions, posting to the ledger, preparing a trial balance, making adjusting entries, preparing financial statements, and making closing entries. After closing entries are made to transfer the balances of temporary accounts to permanent accounts, a post-closing trial balance is prepared. This post-closing trial balance is used to check the accuracy of the recorded transactions and is critical for starting the next accounting period on a clean slate.