In conclusion, a post-closing trial balance is an important financial report for a company to ensure that all temporary accounts have been closed and the books are balanced. It’s important to note that the after-closing trial balance is not a financial statement but rather a report that is used to ensure the accuracy of the company’s books before preparing the financial statements. In contrast, a post-closing trial balance is prepared after closing entries are made at the end of an accounting period.
A post-closing trial balance is a listing of all balance sheet accounts containing non-zero balances at the end of a reporting period. The post-closing trial balance is used to verify that the total of all debit balances equals the total of all credit balances, which should net to zero. Your stockholders, creditors, and other outside professionals will use your financial statements to evaluate your performance.
Example of a Post-Closing Trial Balance
Many students who enroll in an introductory accounting course do
not plan to become accountants. They will work in a variety of jobs
in the business field, including managers, sales, and finance. Accounting software can perform such tasks as posting the journal
entries recorded, preparing trial balances, and preparing financial
statements. Students often ask the post-closing trial balance helps to verify that why they need to do all of these
steps by hand in their introductory class, particularly if they are
never going to be an accountant. It is very important to understand
that no matter what your position, if you work in business you need
to be able to read financial statements, interpret them, and know
how to use that information to better your business.
The permanent balance sheet accounts will appear on the post-closing trial balance with their balances. When the post-closing trial balance is run, the zero balance temporary accounts will not appear. However, all the other accounts having non-negative balances are listed, including the retained earnings account. As with the trial balance, the purpose of the post-closing trial balance is to ensure that debits equal credits.
The Importance of Understanding How to Complete the Accounting
The process of preparing the post-closing trial balance is the
same as you have done when preparing the unadjusted trial balance
and adjusted trial balance. Only permanent account balances should
appear on the post-closing trial balance. These balances in
post-closing T-accounts are transferred over to either the debit or
credit column on the post-closing trial balance. When all accounts
have been recorded, total each column and verify the columns equal
each other.
Many students who enroll in an introductory accounting course do not plan to become accountants. They will work in a variety of jobs in the business field, including managers, sales, and finance. Accounting software can perform such tasks as posting the journal entries recorded, preparing trial balances, and preparing financial statements. Students often ask why they need to do all of these steps by hand in their introductory class, particularly if they are never going to be an accountant.
