Multiple Choice
Which of the following accounts is NOT listed in 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 may 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 total debits equal total credits. Only permanent accounts (assets, liabilities, and equity) appear on this statement, as 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. These accounts are closed at the end of the accounting period and do not appear on the post-closing trial balance. Accounts Payable is a liability account, which is a permanent account and does appear on the post-closing trial balance.
Conclude that only permanent accounts, such as Accounts Payable, will appear on the post-closing trial balance. Temporary accounts are excluded because their balances are reset to zero during the closing process.
Verify your understanding by reviewing the accounting cycle: Temporary accounts are closed to retained earnings, while permanent accounts carry their balances forward to the next accounting period and are included in the post-closing trial balance.
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