Multiple Choice
Which of the following types of accounts are included 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 is listed in a post-closing trial balance?
A
Dividends
B
Service Revenue
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: Dividends, Service Revenue, and Salaries Expense are temporary accounts. Retained Earnings is a permanent account that appears on the balance sheet.
Recognize that temporary accounts are closed: Dividends, Service Revenue, and Salaries Expense are closed to Retained Earnings during the closing process, meaning their balances are reduced to zero and do not appear in the post-closing trial balance.
Confirm that permanent accounts remain: Permanent accounts, such as Retained Earnings, Assets, Liabilities, and Equity, are carried forward to the next accounting period and are listed in the post-closing trial balance.
Conclude that Retained Earnings is the correct answer: Since Retained Earnings is a permanent account, it is included in the post-closing trial balance, while the other accounts listed are temporary and closed.
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