post-closing trial balance

Examples of post-closing trial balance in the following topics:

• The Post-Closing Trial Balance

  • A post-closing trial balance is a trial balance taken after the closing entries have been posted.
  • The post-closing trial balance is the last step in the accounting cycle.
  • The post-closing trial balance can only be prepared after each closing entry has been posted to the General Ledger.
  • As with the trial balance, the purpose of the post-closing trial balance is to ensure that debits equal credits.
  • That is why it is necessary to run a post-closing trial balance.

• What Is the Accounting Cycle?

  • Prepare a trial balance of the accounts and complete the worksheet (includes adjusting entries).
  • The trial balance proves that the books are in balance or that the debits equal the credits.
  • From the trial balance, a company can prepare their financial statements.
  • After those entries are made, a post-closing trial balance is run.
  • The post-closing trial balance verifies the debits equal the credits and that all beginning balances for permanent accounts are in place.

• The Trial Balance

  • During the accounting cycle, a trial balance is prepared.
  • The journal entries were then posted to the general ledger.
  • Recording the balance of an account incorrectly in the trial balance.
  • Then another trial balance is run.
  • The post-closing trial balance proves debits still equal credits after the closing entries have been made.

• The Accounting Cycle

  • Once the entries have all been posted, the Ledger accounts are added up in a process called Balancing.
  • A particular working document called an unadjusted Trial balance is created.
  • Notice that the values are not posted to the trial balance, they are merely copied.
  • These values are then passed through the accounting system resulting in an adjusted Trial balance.
  • Financial statements are drawn from the trial balance which may include: the Income statement, the Balance sheet, and the Cash flow statement.

• Accounting Flows and Cash Flows

  • Post to ledger – transfer the journal entries to ledger accounts.
  • Trial Balance – a calculation to verify that the sum of the debits equals the sum of the credits.
  • If they don't balance, you have to fix the unbalanced trial balance before you go on to the rest of the accounting cycle.
  • Adjusted trial balance – make sure the debits still equal the credits after making the period end adjustments.
  • Closing entries – prepare and post closing entries to transfer the balances from temporary accounts.

• Preparing Financial Statements

  • The process of preparing the financial statements begins with the adjusted trial balance.
  • Preparing the adjusted trial balance requires "closing" the book and making the necessary adjusting entries to align the financial records with the true financial activity of the business.
  • If the books are properly closed, that property will not be included on the balance sheet that is being prepared for the period on December 31st.
  • Using the trial balance, the company then prepares the four financial statements.
  • Information flows from the unadjusted trial balance to the trial balance then to the income statement.

• An Expanded Equation

  • Preparing financial statements requires preparing an adjusted trial balance, translating that into financial reports, and having those reports audited.
  • The process of preparing the financial statements begins with the adjusted trial balance.
  • Preparing the adjusted trial balance requires "closing" the book and making the necessary adjusting entries to align the financial records with the true financial activity of the business.
  • If the books are properly closed, that property will not be included on the balance sheet that is being prepared for the period on December 31st.
  • Using the trial balance, the company then prepares the four financial statements.

• Inputs to Accounting

  • The bookkeeper brings the books to the trial balance stage.
  • An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
  • The general ledger is where posting to the accounts occurs.
  • The extraction of account balances is called a trial balance.
  • The purpose of the trial balance is, at a preliminary stage of the financial statement preparation process, to ensure the equality of the total debits and credits.

• Recognizing Notes Receivable

  • These assets represent rights to receive future payments that are not due at the balance sheet date.
  • To present an accurate picture of the affairs of the business on the balance sheet, firms recognize these rights at the end of an accounting period by preparing an adjusting entry to correct the account balances.
  • The ending balance on the trial balance sheet for accounts receivable is usually a debit.
  • The first method is the allowance method, which establishes a contra-asset account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable.
  • The change in the bad debt provision from year to year is posted to the bad debt expense account in the income statement.

• Vertical Checks and Balances

  • Checks and balances is a governmental structure that gives each of the branches a degree of control over the actions of the other.
  • To prevent one branch of government from becoming supreme, to protect the minority from the majority, and to induce the branches to cooperate, government systems employ a separation of powers in order to balance each of the branches.
  • This is accomplished through a system of checks and balances which allows one branch to limit another, such as the power of Congress to alter the composition and jurisdiction of the federal courts.
  • The branch has sole power of impeachment (House of Representatives) and trial of impeachments (Senate), meaning it can remove federal executive and judicial officers from office for high crimes and misdemeanors.
  • He makes appointments to the federal judiciary, executive departments, and other posts with the advice and consent of the Senate, and has power to make temporary appointments during the recess of the Senate.