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Post-Closing Trial Balance: Preparation & Purpose

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  • 0:01 What Is the…
  • 0:26 Why Is It Important?
  • 1:07 Example Post-Closing…
  • 2:09 Lesson Summary
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Lesson Transcript
Instructor: Rebekiah Hill

Rebekiah has taught college accounting and has a master's in both management and business.

The last step in the accounting process is to create the post-closing trial balance. In this lesson, you will learn what the post-closing trial balance is, why it's important, and what accounts appear on it.

What Is the Post-Closing Trial Balance?

The accounting cycle is like a circle. It has a definite beginning and a definite end. The last thing that occurs at the end of the accounting cycle is to prepare a post-closing trial balance. What is a post-closing trial balance, you wonder? The post-closing trial balance is the report that lists all the accounts of a company and their balances after all adjustments and closing entries have been made.

Why Is It Important?

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In the accounting cycle, there are two other trial balances that are prepared. The first is simply called the trial balance. This report lists all the accounts that a company has and their balances. The next one is called the adjusted trial balance and is a list of all the company accounts and their balances after any adjustments have been made. So if there are already two other trial balance reports, why would you possibly need another one? The answer to this question is relatively simple. The post-closing trial balance shows the final balance in company accounts for the current accounting period, which are the exact same balances that the accounts have in the beginning of the next accounting period.

Example Post-Closing Trial Balance

Let's look at an example of a post-closing trial balance.

Wasabi International is a small company that sells animal grooming products worldwide. In the first quarter of operations, the post-closing trial balance looked like this:

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Do you notice that not all accounts show up on the post-closing trial balance? Why is that? The answer is because only the permanent accounts of a company show up on the report.

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