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Lesson 1: Course Orientation and Review of Accounting Cycle
Post-Closing Trial Balance
Once the closing entries have been journalized and posted, a third trial balance may be prepared. It is called the post-closing trial balance. Since all of the temporary accounts now have zero balances as a result of the closing process, only permanent accounts (asset, liability, and equity account balances other than dividends) should appear on the post-closing trial balance. The post-closing trial balance is the last step in finalizing the accounting period prior to recording business transactions in the next accounting period (often the next month).
| Post-Closing Trial Balance | ||
|---|---|---|
| Account | Debit | Credit |
| Cash | $82,100 |
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|
| Accounts Receivable | 9,000 |
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|
| Supplies | 3,200 |
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|
| Prepaid Insurance | 2,000 |
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|
| Truck | 15,000 |
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|
| Equipment | 40,400 |
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|
| Account Payable |
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| $2,000 |
| Interest Payable |
-
| 167 |
| Notes Payable |
-
| 40,000 |
| Unearned Revenue |
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| 6,000 |
| Common Stock |
-
| 100,000 |
| Retained Earnings | 3,533 | |
|
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| $151,700 | $151,700 |
It should be noted that the post-closing trial balance provides evidence that a company has properly recorded the journal entries and posted the closing entries. However, none of the trial balances (preliminary, adjusted or post-closing) are foolproof because they do not prove that the company has recorded all transactions or that the general ledger is correct. For example, the post-closing trial balance will still be in balance if a transaction has not been recorded and posted to the ledger, or if a transaction is recorded and posted twice in error.