Assuming a company has been in business several years, the retained earnings balance which should appear...

Assuming a company has been in business several years, the retained earnings balance which should appear on its post closing trial balance will be the ending retained earnings balance as opposed to the beginning retained earnings balance

True or false?

Expert Solution

Answer - True.

Post closing trail balance - It is a list of permanent account balances or Balance sheet account balances.
This trail balance is prepared after all temporary accounts [Or revenue, expense, gain and loss items] have been closed to retained earnings.

1	Journal entries made and posted during the financial year
2	Unadjusted trail balance prepared
3	Adjusting journal entries made and posted [At the end of the accounting period]
4	Adjusted trail balance prepared	Includes beginning retained earnings balance among other temporary accounts and Permanent accounts
5	Income statement or Profit and Loss statement prepared [Temporary accounts]	Current year income is calculated
6	Retained earnings statement is prepared	Closing retained earning balance is calculated.
7	Balance sheet prepared [Permanent accounts]	Closing retained earnings balance is included in shareholder's equity
8	Cash flow statement is prepared
9	Closing Journal entries made and posted [to zero out all temporary accounts]
10	Post-closing trial balance prepared [Contains balances that will carry forward to next year]	Includes Ending retained earnings balance among other balance sheet items

The ledger balances in the Post closing trail balances carry forward to the next year and ending retained earnings balance is one of them.

ekkarill92 answered 2 years ago

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