Multiple Choice
A post-closing trial balance would show a zero balance in which one of the following accounts?
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3. Accrual Accounting Concepts
Post-Closing Trial Balance
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Which financial statement is typically prepared last in the accounting cycle?
A
Adjusted Trial Balance
B
Balance Sheet
C
Post-Closing Trial Balance
D
Income Statement
Verified step by step guidance1
Understand the accounting cycle: The accounting cycle is a series of steps that businesses follow to record, summarize, and report financial transactions. It typically ends with the preparation of financial statements and closing entries.
Review the sequence of financial statements: The financial statements are prepared in a specific order—Income Statement, Statement of Retained Earnings, Balance Sheet, and finally, the Post-Closing Trial Balance.
Clarify the purpose of the Post-Closing Trial Balance: The Post-Closing Trial Balance is prepared after closing entries are made to ensure that the ledger accounts are balanced and ready for the next accounting period. It contains only permanent accounts (assets, liabilities, and equity).
Compare the options provided: The Adjusted Trial Balance is prepared before financial statements, the Income Statement is prepared first among the financial statements, and the Balance Sheet is prepared after the Income Statement. The Post-Closing Trial Balance is prepared last in the accounting cycle.
Conclude that the Post-Closing Trial Balance is the correct answer: Based on the sequence and purpose of the accounting cycle, the Post-Closing Trial Balance is the final step in the preparation process.
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