I recently saw this question on Yahoo Answers.  Below is my response: 

Romans 3:23 states “All have sinned and come short of the glory of God.” 

Therefore we need God’s grace and mercy no matter what to save us.

However further scripture states everyone who dies (so everyone: ) will stand before God and be judged of their works (Revelation 20:12-13)

Further scripture supports this:

“And it is requisite with the justice of God that men should be judged according to their works; and if their works were good in this life, and the desires of their hearts were good, that they should also, at the last day, be restored unto that which is good.” (Alma 41:3)

In addition we are all given the light of Christ (some call it a consience) and knowledge of what is good and what is evil as quoted in this scripture:

For behold, my brethren, it is given unto you to judge, that ye may know good from evil; and the way to judge is as plain, that ye may know with a perfect knowledge, as the daylight is from the dark night.
  16 For behold, the Spirit of Christ is given to every man, that he may know good from evil; wherefore, I show unto you the way to judge; for every thing which inviteth to do good, and to persuade to believe in Christ, is sent forth by the power and gift of Christ; wherefore ye may know with a perfect knowledge it is of God.
  17 But whatsoever thing persuadeth men to do evil, and believe not in Christ, and deny him, and serve not God, then ye may know with a perfect knowledge it is of the devil; for after this manner doth the devil work, for he persuadeth no man to do good, no, not one; neither do his angels; neither do they who subject themselves unto him.  (Moroni 7:15-17)

To sum everything up.  We are all given a consience and ability to choose good or evil.  We all will come short of the glory of God so we need His grace and mercy to save us.  However, we will be brought to the judgement seat after we die and stand accountable to the knowledge we’ve been given from God.

Would you add or take anything out on this answer?