Question: After all adjusting entries have been recorded in the journal and posted to the appropriate T-accounts
in the ledger, what happens next in the accounting process?
Answer: At this point, the accountant believes that all account balances are fairly presented because no material
misstatements exist according to U.S. GAAP. As one final check, an adjusted trial balance is produced for a last,
careful review. Assuming that no additional concerns are noticed, the accountant prepares an income statement, a
statement of retained earnings, and a balance sheet.
The basic financial statements are then completed by the production of a statement of cash flows. In contrast to the
previous three, this remaining statement does not report ending ledger account balances but rather discloses the
various changes occurring during the period in the composition of the cash account.
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