Definition: A post closing trial balance is a list of permanent accounts and their balances after closing entries have been journalized and recorded in the accounting system. These accounts will be carried forward and become the opening balances for the next accounting period.
What Does Post Closing Trial Balance Mean?
Preparing the post closing trial balance is one of the last steps in the accounting cycle. It’s basically a summary of the general ledger at the end of an accounting period after the closing entries have been made and the financial statements have been prepared. The purpose of this trial balance is to make sure that no more temporary account balances exist before the books are rolled forward into the next year.
Temporary accounts like revenues, expenses, and distributions have to be closed at the end of each accounting period to permanent accounts like assets, liabilities, and equity. The post closing trial balance lists all remaining accounts with balances after the closing entries have been posted to ensure that no temporary accounts still exist.
The format of this trial balance is similar to other trial balances in that it has a heading with the name of the company, the name of the report, and the date it was created. There are usually three columns in the body: one for the account names, debits, and credits.
Like more trial balances, the debit and credit columns are totaled at the bottom to ensure the accounting equation is in balance. Here is an example.
As you can see, the accounts are generally listed in balance sheet order starting with the assets followed by the liabilities and then equity accounts. The total debits must always equal the credits. If these two don’t equal, there is either a problem with closing entries or the adjusted trial balance.