The post-closing trial balance is the last artifact of one period and the first of the next. It lists assets, liabilities, and equity, and nothing else.
If a revenue, expense, or dividend account appears on it with a balance, closing did not finish. That is the check the artifact exists to provide, and it is a stronger check than balancing alone. The columns would still agree if a revenue account had been left open and its balance offset somewhere else.
Its totals should also agree with the balance sheet, with one caution about form. The balance sheet nets contra accounts. Accumulated depreciation sits inside a single carrying amount there and appears as its own credit line here. The two are consistent, not identical in shape.
Retained earnings is the line that moved. On the adjusted trial balance it still held the opening balance. Here it holds the opening balance plus net income less dividends. That is the figure the statement of changes in equity derived independently.
Put the concept to work
Understand this concept
- Explain which accounts appear on a post-closing trial balance and which cannot, and say what its existence proves about the closing process.
Apply this concept
- Draw the post-closing trial balance from a closed ledger, and check it against the balance sheet and against the rule that no temporary account carries a balance.
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- Closing entry — Understand
To understand this concept: Required. What survives closing is decided by what closing does.
- Permanent account — Apply
To apply this concept: Required. Every line is a permanent account balance.
- Permanent account — Understand
To understand this concept: Required. The surviving accounts are exactly the permanent ones.
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- Post-closing trial balance — Understand
To apply this concept: Required. Drawing it requires knowing which accounts belong on it.
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- Post-closing trial balance — Apply
Required level here: understand. Required. Drawing it requires knowing which accounts belong on it.
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