Which step follows the preparation of an adjusted trial balance?

After preparing an adjusted trial balance, the next step in the accounting cycle is to prepare the financial statements. The adjusted trial balance serves as a comprehensive summary of all account balances after adjustments have been made, ensuring that debits equal credits. This step is crucial because it provides the foundation for the financial statements, which include the income statement, balance sheet, and cash flow statement, among others. These financial statements are essential for communicating the organization’s financial position and performance to stakeholders, including management, investors, and creditors.

The accuracy of the financial statements heavily relies on the integrity of the adjusted trial balance, making this step critical in the overall accounting process.