Multiple Choice
Which of the following accounts appear on the 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 in a post-closing trial balance?
A
Service Revenue
B
Dividends
C
Salaries Expense
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 the ledger is balanced and only permanent accounts (balance sheet accounts) remain. Temporary accounts (income statement accounts and dividends) are closed to retained earnings.
Identify the types of accounts listed in the problem: Service Revenue, Dividends, and Salaries Expense are temporary accounts, while Retained Earnings is a permanent account.
Recall that temporary accounts (e.g., revenues, expenses, and dividends) are closed at the end of the accounting period. Their balances are transferred to Retained Earnings, leaving them with a zero balance and excluding them from the post-closing trial balance.
Recognize that permanent accounts (e.g., assets, liabilities, and equity accounts like Retained Earnings) are not closed and will appear in the post-closing trial balance.
Conclude that Retained Earnings is the correct account to appear in the post-closing trial balance, as it is a permanent account reflecting the cumulative earnings retained in the business after closing entries.
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