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Q

The Accounting Cycle Requires Three Trial Balances to Be Done, In What Order Should They Be Prepared?

A

The three balances required in an accounting cycle include unadjusted, adjusted, and post-closing trial balances, in that order.

The process of preparing complete financial statements starts with the culling of accounts and balances from the preparation of journal entries. They are then posted to the ledgers for the preparation of the trial balance.

The unadjusted trial balance is the summary of all transactions that occurred during the period under review and it is usually part of the worksheet. Next to it is the adjusted trial balance that you get after you have prepared and posted the adjusting journal entries. In some cases, the adjusted trial balance acts as the preclosing trial balance.

Finally, is the post-closing trial balance that you prepare from journalizing and closing your entries. The amounts and accounts in this post-closing trial balance are usually carried forward to the balance sheet.

2 months ago
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