Question

Explain with at least 200 words.

Explain the process of closing the books and describe the content and purpose of a post-closing trial balance.

Answer 1

Ans- The process of closing the books :-

The process of closing the books means that the Accounts book is closed. Trial balance is prepared, Statement of Income & Expenses and Balance Sheet is prepared to ascertain the Financial position and performance of the business.It is important that one should ensure that all necessary journal entries have been passed before the books closure because once the books are closed, One is not permitted to pass entries further. Accounts are freezed for a particular period.

Therefore, we can say that the process of closing the books - to make no further entries, balance the books and draw up statements from them.

The content of Post-closing trial balance-

The content of the Post-closing trial balance contains only Balance Sheet Accounts.

Purpose of a Post-closing Trial Balance-

The purpose of the post-closing trial balance is just to ensures that the sum of the total debits is equal to the sum of the total credits at the end of an accounting period and carried forward to the next accounting period. A post-closing trial balance is a listing of all balance sheet accounts containing non-zero balances at the end of a accounting period.