Year-End Accounting Balances and Transfers

Steps:

• Balance cash book by reconciling bank statements and adjusting for errors or omissions.
• Balance ledger accounts by calculating closing balances for assets, liabilities, and equity.
• Transfer net income or loss from income statement to retained earnings in equity.
• Prepare trial balance post-transfers to ensure debits equal credits.

Why C is correct:

• Statements 1 and 4 align with standard double-entry bookkeeping, where cash book balancing verifies cash flows and year-end transfers update equity per the accounting equation (Assets = Liabilities + Equity).

Why the others are wrong:

• A includes incorrect statement 2, which misstates transfer timing.
• B includes incorrect statement 2, overlooking ledger reconciliation rules.
• D excludes correct statements 1 and 4, focusing only on partial procedures.

Final answer: C