Question

If the totals of the adjusted trial balance Debit and Credit columns are equal, but the post closing trial balance does not balance, what is the likely cause of the problem? Answer in a 100 word or more.

Answer 1

• If the debit and the credit sides of the adjusted Trial balance are equal BUT the post closing trial balance does not balance, the basic GENERAL reason can be that there must have been some errors while recording the CLOSING ENTRIES.

While journalising the closing entries, following concepts should be kept in mind:

--Revenues account have normal credit balance and must be closed by debiting them.
--Expenses account, Dividend account, Withdrawals account have a normal debit balance and must be closed by Crediting them.

All adjustment of closing entries are indirectly adjusted to:

--Capital balance [in case of sole proprietorship and partnership], OR
--Retained Earnings account [in case of corporations]

The post closing trial balance would not tally if the closing entries adjustement’s effect are not recorded properly and accurately in the Capital account or Retained earnings account, as the case mey be.

• Other reasons for possible imbalance between debit and credit sides of post closing trial balance can be:

--Putting Asset account’s balance on Credit side,
--Putting Liability/Capital account’s balance on Debit side,
--Entering wrong balances of accounts on Post closing trial balance.
--Putting balances of Temporary accounts (like Sales revenue, Interest expense) on Post closing trial balance.
--Omission of any permanent account and its balance.