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    Accounting Standards Library
    Wednesday
    May152013

    What is a post-closing trial balance?

    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 contains no revenue, expense, gain, loss, or summary account balances, since these temporary accounts have already been closed and their balances moved into the retained earnings account in the balance sheet as part of the closing process.

    If any revenue, expense, gain, loss, or summary account balances appear in the trial balance subsequent to the closing process, it is because they are associated with the next accounting period.

    The post-closing trial balance contains columns for the account number, account description, debit balance, and  credit balance. It will likely not contain "Post Closing Trial Balance" in the header, since few accounting computer systems use this designation. Instead, it will use the standard "Trial Balance" report header.

    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. Once you have ensured that this is the case, set a flag to prevent additional transactions from being recorded in the old accounting period, and begin recording accounting transactions for the next accounting period.

    Accounting software requires that your journal entries balance before it allows them to be posted to the general ledger, so it is essentially impossible to have an unbalanced trial balance. Thus, the post-closing trial balance is only useful if you are manually preparing accounting information. For this reason, most procedures for closing the books do not include a step for printing and reviewing the post-closing trial balance.

    Example of a Post-Closing Trial Balance

    Note that there are no temporary accounts listed in the following post-closing trial balance:

    ABC Company
    Trial Balance
    June 30, 20XX

    Account
    Number
    Account
    Description

    Debit

    Credit
    1000 Cash
    $105,000  
    1500 Accounts receivable 320,000  
    2000
    Inventory 500,000  
    3000 Fixed assets
    2,000,000  
    3100 Accumulated depreciation (480,000)  
    4000 Accounts payable   $195,000
    4500 Accrued expenses   108,000
    5000 Retained earnings   642,000
    5500 Common stock   1,500,000
      Totals $2,445,000 $2,445,000

     
    Related Topics

    General journal
    The trial balance
    Trial balance errors
    What is an adjusted trial balance?
    What is an unadjusted trial balance?

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