What is the final step in the accounting cycle?

The final step in the accounting cycle is to prepare a post-closing trial balance. This step is crucial because it ensures that all accounts are in balance following the closing entries, which transfer temporary account balances (like revenues and expenses) to permanent accounts (like retained earnings). The post-closing trial balance confirms that all debits and credits are equal after the closing entries have been made, providing assurance that the accounting records are accurate and that the books are ready for the next accounting period.

This step serves as a check to verify that the closing process was completed correctly and that the balances of the permanent accounts are correct, setting a solid foundation for future accounting activities. Without this step, there would be no way to ascertain the integrity of the financial information for the next cycle.