Define a post-closing trial balance.
A trial balance is a bookkeeping worksheet in which the balance of all ledgers is compiled into debit and credit account column totals that are equal. A trial balance is prepared after entering the regular transactions of the period, and the second trial balance follows after posting the adjusting entries, while the third trial balance occurs after closing, and therefore, is called the post-closing trial balance.
The post-closing trial balance is used in accounting to verify the equality of the total of debit balances and the total of credit balances, which should net to zero. As all temporary accounts will have zero balances, the post-closing trial balance will consist of only permanent accounts. Below is the example of the post-closing trial balance of the business consulting company provided by the Accounting For Management:
It is worth mentioning that the post-closing trial balance of the business consulting company from the example above does not include any information on revenue, expense, gain, or loss.
To sum it up, a post-closing trial balance serves as a proof that the company has journalized and posted the closing entries in an effective and timely manner and that the bookkeeping entrees of the company are mathematically correct. It is also necessary to demonstrate that the accounting equation is in balance at the end of the accounting period. When the post-closing trial balance is prepared, the accounting cycle of an accounting period is over. The cycle is repeated with the preparation of journal entries as the first step in the next accounting period.
"Define a post-closing trial balance." Custom-Writing, 1 Apr. 2020, custom-writing.org/qna/post-closing-trial-balance/.
1. Custom-Writing.org. "Define a post-closing trial balance." April 1, 2020. https://custom-writing.org/qna/post-closing-trial-balance/.
Custom-Writing.org. "Define a post-closing trial balance." April 1, 2020. https://custom-writing.org/qna/post-closing-trial-balance/.
Custom-Writing.org. 2020. "Define a post-closing trial balance." April 1, 2020. https://custom-writing.org/qna/post-closing-trial-balance/.
Custom-Writing.org. (2020, April 1). Define a post-closing trial balance. Retrieved from https://custom-writing.org/qna/post-closing-trial-balance/
Custom-Writing.org. (2020) 'Define a post-closing trial balance'. 1 April.