Post-Closing Trial Balance
The definition of a post-closing trial balance
Preparing a balance sheet is the inherent part of all accounting procedures. You have to maintain a proper balance sheet in your organization in order to keep all the transactions secure and safe. The method of book keeping is also known as trial balance. As the name suggests, post-closing trial balance denotes the method by which the records are checked once more for the purpose of correction if any entry is mistakenly inserted by the record keepers. It will prove to be a disaster for the account keepers to make any wrong entry. So by this system the entire denominations are checked before a new entry is formed.
How to make a post-closing trial balance
Accounts and bookkeeping are an indispensable part of any organization. If you maintain a big firm or a small firm an accounts book should be precisely maintained to give all the expenditure and income of the business in a scientific way. The way this is done is a very simple method which all the accountants of the world are aware of. It is called trial balance. The golden rule of trial balance is that the debit and credit should always match. If any discrepancy is found, then the entire entries are checked once more with a fresh approach and a new method is built up.
Sometimes it happens that a trial balance is faulty because it is randomly made by the person doing the work of the accounts. Because of the same reason journal entries are changed into a proper balance sheet format. Otherwise, the journal entries would have been sufficient. The most scientific way of closing the book of a particular year is the making of a post-closing trial balance. A proper check up is done before closing a particular year as a record book.
All the assets and liabilities of a business are kept on track while making a trial balance. Post-closing trial balance deals with a checking of the clerical accuracy of the entire work. If it doesn't work the entire business might be jeopardized and there would be no hope of retaining the original and unabridged form of journal entries.
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Most WantedFinancial Terms
- Debt-to-Equity Ratio
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