Which stage follows preparing a trial balance in the accounting cycle?

After preparing a trial balance, the next step in the accounting cycle is to prepare an adjusted trial balance. This process involves listing all the accounts and their balances after adjustments have been made for accruals, deferrals, and any necessary corrections. The adjusted trial balance ensures that the books are accurate before the financial statements are generated.

Creating an adjusted trial balance is crucial because it confirms that total debits equal total credits after all adjustments have been accounted for. This balance is essential for the accuracy and reliability of the subsequent financial statements. Only after this step can an accountant proceed to prepare the income statement, balance sheet, and cash flow statement based on the adjusted figures. This structured approach allows for clear tracking and verification of financial data, which is foundational in accounting practices.