Understand what Permanent & Temporary accounts are. What is on a post closing trial balance?

Expert Solution

ANSWER :

Permanent Accounts (real Accounts) are those found on the balance sheet & such category are Assets, Liability and Owner's Equity accounts.

Temporary Accounts (nominal accounts) are those found on the trading and profit & loss Account and balance sheet & such category are Revenue, Expense and Drawing Account.

Post closing in trial balance taken list of all accounts & their balances after the closing entries have been journalised and posted to the ledger. In simple term, Post closing in trial balance is list of permanent accounts that still have balances after the closing entries have been made.

Those list of accounts is identical to the accounts shown on the balance sheet.That will be known that all income statement accounts have been closed and no longer have a current balance.The motive of preparing the post closing trial balance is verify that all temporary accounts have been closed properly and the total debits and credits in the accounting system equal after the closing entries have been made.

Post closing trial balance format are as follow :

ABC LTD. Inc.

Post Closing Trial Balance

March ####

Particular's	Debit	Credit
Building	###
Accounts Receivable	###
Inventory	###
Investments	###
Loan and Advance	###
Share Capital		###
Reserve and Surplus		###
Trade Payable		###
Long term Liabilities		###

TOTALS ### ###

ekkarill92 answered 1 year ago

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