Multiple Choice
Which of the following best describes the purpose of a post-closing trial balance?
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3. Accrual Accounting Concepts
Post-Closing Trial Balance
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Which of the following accounts would appear on a post-closing trial balance?
A
Dividends
B
Accounts Payable
C
Rent Expense
D
Service Revenue
Verified step by step guidance1
Understand the purpose of a post-closing trial balance: It is prepared after closing entries are made to ensure that the ledger is balanced and only permanent accounts (assets, liabilities, and equity) remain. Temporary accounts (revenues, expenses, and dividends) are closed to retained earnings.
Identify the nature of each account listed in the problem: Dividends, Rent Expense, Service Revenue, and Accounts Payable.
Classify each account: Dividends, Rent Expense, and Service Revenue are temporary accounts, meaning they are closed at the end of the accounting period. Accounts Payable is a permanent account, as it represents a liability that carries forward to the next period.
Determine which accounts appear on the post-closing trial balance: Only permanent accounts (assets, liabilities, and equity) appear on the post-closing trial balance. Temporary accounts are excluded because their balances are reduced to zero during the closing process.
Conclude that Accounts Payable is the correct answer because it is a permanent liability account that remains on the post-closing trial balance.
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