What is the seventh step in the accounting cycle?

• A. Prepare post-closing trial balance
• B. Prepare financial statements
• C. Journalize transactions
• D. Collect and analyze source documents

Answer: (A)

The seventh step is preparing the post-closing trial balance. After all closing entries are completed, this step checks that the ledger is still in balance and that temporary accounts have been reset to zero. It lists only permanent accounts (assets, liabilities, and equity) with their balances, confirming that debits still equal credits. This provides a clean starting point for the next accounting period and serves as a final verification before new-period transactions begin. Collecting source documents and journalizing happen earlier, adjustments and financial statements occur before closing, and the post-closing trial balance comes after closing as the final checkpoint.