Which of the following statements about the post-closing trial balance is correct? A) The post-closing trial...

Which of the following statements about the post-closing trial balance is correct?

A) The post-closing trial balance is a report prepared before the adjustments and the financial statements to prove that debits equal credits.

B) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements.

C) The post-closing trial balance is an internal report prepared at the end of the accounting cycle.

D) The post-closing trial balance proves that all entries have been made correctly and accurately during the accounting period.

Solutions

Expert Solution

Correct Answer-- (C) The post-closing trial balance is an internal report prepared at the end of the accounting cycle.

Explanation

Post closing trial balance is the third and last trial balance prepared by the accountants. Post closing trial is prepared after adjustment entries and closing entries are made.

All the temporary accounts are closed in the closing entries such as expenses, revenues , withdrwls, etc.

Post closing trial balance is not distributed to investors or stakeholders, only the finantial statements are distributed.

Post closing trial cannot certify that all entries are made correctly, for example a compensating error such as expense for salary is wrongly debited to commission, the closing trial will tally and final income balance would still be correct but income statement would still have this error entry. Post closing tria;l can only verify that debits are equal to credits.

ekkarill92 answered 1 year ago

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