Intuit Bookkeeping Professional Certificate 2025 – 400 Free Practice Questions to Pass the Exam

After completing the process of recording and posting business transactions, the next logical step in the accounting cycle is to prepare an unadjusted trial balance. This step involves compiling a list of all the account balances from the general ledger to ensure that the total debits equal the total credits. The unadjusted trial balance serves as a foundational tool for identifying any discrepancies or errors prior to making any needed adjustments.

Performing this step is crucial because it verifies the accuracy of the bookkeeping entries made during the period. If the debits and credits do not match, it indicates that there may be errors somewhere in the recording or posting process that need to be addressed before moving on to further financial statements or adjusting entries.

Subsequent steps, such as preparing an income statement or balance sheet, hinge on the correctness of the preliminary trial balance; thus, ensuring its accuracy is essential for trustworthy financial reporting. Closing the books is also a later step that occurs after finalizing all adjustments and preparing the financial statements.