Future Business Leaders of America (FBLA) Accounting Practice Test

What is the purpose of a post-closing trial balance?

1. To verify that all entries have been recorded

2. To ensure accounts are balanced after closing entries

3. To project future income statements

4. To prepare the trial balance before financial statements

The correct answer is: To ensure accounts are balanced after closing entries

A post-closing trial balance serves a crucial role in the accounting cycle, particularly after the closing entries have been made. The main purpose of this trial balance is to ensure that all temporary accounts, such as revenues and expenses, have been closed out and that the remaining balances in the permanent accounts, like assets, liabilities, and equity, are accurate and balanced. This verification process reinforces the integrity of the accounting records, confirming that the closing process was completed successfully and that there are no discrepancies. By preparing a post-closing trial balance, accountants can promptly identify any errors that may have occurred in the closing entries, maintaining the reliability of the financial statements prepared for the reporting period. This balance is essential for moving forward into the new accounting period with accurate figures, as it ensures that the opening balances for the new period are correct. In contrast, the other options present different functions or stages in the accounting process that are not directly related to the purpose of a post-closing trial balance. For example, verifying that all entries have been recorded pertains more to earlier stages in the accounting cycle than to the specific verification that occurs at the post-closing stage. Similarly, projecting future income statements is a form of forecasting that does not relate to the closing process, while