Post-Closing Trial Balance
Identify Permanent Accounts
Which of the following appear in a post-closing trial balance?
✓ Cash
✗ Service Revenue
✓ Accounts Payable
✗ Rent Expense
✓ Capital
✗ Drawings
✓ Equipment
True or False
Revenue accounts appear in the post-closing trial balance.
➛ False
Post-closing trial balance is prepared after closing entries.
➛ True
Only balance sheet accounts appear.
➛ True
The purpose is to prepare financial statements.
➛ False
Total debits must equal total credits.
➛ True
Prepare a Post-Closing Trial Balance
After closing entries, the following balances remain
Cash
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
9,500
2,000
15,000
4,000
3,500
6,000
13,000
2,000
15,000
4,000
3,500
6,000
13,000
Task
Prepare the post-closing trial balance.
Account Name
Cash
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
Total
Cash
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Loan Payable
Capital
Total
Debit
9,500
2,000
15,000
-
-
-
-
26,500
9,500
2,000
15,000
-
-
-
-
26,500
Credit
-
-
-
4,000
3,500
6,000
13,000
26,500
-
-
-
4,000
3,500
6,000
13,000
26,500
Mini Case Study
A small business has completed its financial statements and closing entries.
The accountant wants to make sure the books are correct before starting the new year.
Questions
Why is a post-closing trial balance prepared?
To confirm that
➛ All temporary accounts are closed
➛ Only permanent accounts remain
➛ Debits equal credits before the next period
What type of accounts does it include?
➛ Assets
➛ Liabilities
➛ Capital
What error might it help detect?
➛ Unclosed revenue or expense accounts
➛ Imbalance caused by incorrect closing entries
Can revenue accounts appear? Why or why not?
➛ No
Because revenue accounts are temporary and are closed to capital.
What accounting cycle step comes next?
➛ Beginning of the next accounting period
Quick Quiz
What is the main purpose of a post-closing trial balance?
➛ To ensure the books are balanced after closing entries.
When is it prepared?
➛ After closing entries are completed.
Name two accounts that appear in it.
➛ Cash
➛ Capital
any valid permanent accounts
Name one account that does NOT appear.
➛ Service Revenue
or any expense or drawings account
It prepares the company for the next accounting period.
➛ True
Module 3 ➧ Here