Multiple Choice
Why are temporary accounts omitted from a post-closing trial balance?
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3. Accrual Accounting Concepts
Post-Closing Trial Balance
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Which account is typically listed first in the post-closing trial balance?
A
Cash
B
Accounts Payable
C
Service Revenue
D
Retained Earnings
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 total debits equal total credits and to confirm that only permanent accounts (balance sheet accounts) remain.
Identify the types of accounts that appear in the post-closing trial balance: Only permanent accounts, such as assets, liabilities, and equity accounts, are included. Temporary accounts like revenues, expenses, and dividends are closed to retained earnings and do not appear.
Determine the order in which accounts are listed: Accounts in the post-closing trial balance are typically listed in the order they appear in the chart of accounts, starting with assets, followed by liabilities, and then equity.
Recognize that 'Cash' is an asset account: Asset accounts are listed first in the post-closing trial balance, and cash is usually the first asset account listed due to its liquidity.
Conclude that 'Cash' is typically listed first in the post-closing trial balance, as it is the first asset account in the chart of accounts and remains open after closing entries.
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