Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Post-Closing Trial Balance

Financial Accounting

3. Accrual Accounting Concepts

Post-Closing Trial Balance

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Multiple Choice

Why are temporary accounts omitted from a post-closing trial balance?

Because they represent long-term assets and liabilities.

Because they are not used in the preparation of financial statements.

Because they are only used for internal management purposes.

Because their balances have been closed to zero at the end of the accounting period.

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Verified step by step guidance

Understand the concept of temporary accounts: Temporary accounts are accounts that track financial activity for a specific accounting period, such as revenues, expenses, and dividends. These accounts are reset to zero at the end of the period.

Recognize the purpose of closing entries: Closing entries are made at the end of the accounting period to transfer the balances of temporary accounts to permanent accounts (e.g., transferring net income to retained earnings). This ensures that temporary accounts start fresh for the next period.

Learn why temporary accounts are omitted: Since the balances of temporary accounts are closed to zero, they do not carry forward to the next accounting period. Therefore, they are not included in the post-closing trial balance, which only lists accounts with non-zero balances.

Understand the role of the post-closing trial balance: The post-closing trial balance is prepared after closing entries are made. It ensures that the ledger is balanced and only includes permanent accounts, such as assets, liabilities, and equity, which are used in the preparation of financial statements.

Connect the reasoning to the correct answer: Temporary accounts are omitted from the post-closing trial balance because their balances have been closed to zero at the end of the accounting period, making them irrelevant for the trial balance.