QQuestionAccounting
QuestionAccounting
Select the statement below that describes a post-closing trial balance.
Multiple choice question.
It is a listing of all temporary accounts and their balances after closing.
It is a listing of all permanent accounts and their balances immediately after the adjusting process.
It is a listing of all permanent accounts and their balances after closing.
It is a financial statement that describes all revenue and expense accounts after closing
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Answer
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Step 1
The correct answer is: "It is a listing of all permanent accounts and their balances after closing." Here's the reasoning: A post-closing trial balance is a report that lists all permanent accounts (i.e., accounts that are carried forward to the next accounting period) and their balances after the closing process has taken place. This is in contrast to a trial balance, which is a report listing all accounts and their balances before closing. After closing, the balances in the temporary or income summary accounts (i.e., revenue, expense, and dividend accounts) are transferred to the retained earnings account, which is a permanent account. The post-closing trial balance reflects these new balances in the permanent accounts. Therefore, the statement "It is a listing of all permanent accounts and their balances after closing" best describes a post-closing trial balance.
Final Answer
The correct answer is: "It is a listing of all permanent accounts and their balances after closing." Here's the reasoning: A post-closing trial balance is a report that lists all permanent accounts (i.e., accounts that are carried forward to the next accounting period) and their balances after the closing process has taken place. This is in contrast to a trial balance, which is a report listing all accounts and their balances before closing. After closing, the balances in the temporary or income summary accounts (i.e., revenue, expense, and dividend accounts) are transferred to the retained earnings account, which is a permanent account. The post-closing trial balance reflects these new balances in the permanent accounts. Therefore, the statement "It is a listing of all permanent accounts and their balances after closing" best describes a post-closing trial balance.
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