June 30, 2021

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Post Closing Trial Balance

Post Closing Trial Balance

Business accounting is an integral part of the business process and should be treated with special responsibility. Recordkeeping includes the following main points:

  • preparation of the necessary documentation;
  • data processing;
  • preparation of financial statements;
  • contacting regulatory authorities and financial institutions.

This part of the company’s functioning is one of the most important. The correct organization of bookkeeping will allow an entrepreneur to avoid penalties, which are enforced by regulatory authorities in case of violations. It is also useful for the manager since a complete assessment of the performance for a certain period can be carried out. It allows you to understand what mistakes were made and what should be done to achieve greater efficiency.

Post Closing Trial Balance

Trial Balance: Definition

The next step after preparing an Adjusted Trial Balance would be the closing process. All accounts of the statement of financial results are closed to the Income Summary account. The Post Closing Trial Balance reveals the balance of accounts after the closing process and consists of permanent accounts only.

It demonstrates that accounts are in balance. Thus, the purpose of this step in the accounting cycle is to verify the correctness of the closing transactions. The ending balance on the cash account of one reporting period must be the opening balance of this account in the next reporting period.

Business owners and managers use Post Closing Trial Balances for various analysis purposes, planning and budgeting. They can also use such reports to compute financial ratios. Financial ratios are mathematical formulas that provide business owners and managers with indicators to measure against a competing company or industry standard. Financial ratios are a performance management technique using accounting information.


In the modern bookkeeping and accounting world, all the closing entries and the Trial Balances themselves are no longer done on paper. Instead, the bookkeeper prepares them using special accounting software. Moreover, many programs allow automizing a big chunk of this work and the bookkeeper just needs to review the information to ensure its accuracy.

Benefits of Proper Accounting

Given the importance of the process, it is worth concluding that the accounting in the enterprise, including closing entries and the preparation of the Post Closings Trial Balance, should be carried out by professionals. The success of the entire company will depend on this. The accounting department must constantly monitor the operations performed and keep records for the tax authorities.

A large number of companies are opened annually that need the services of a bookkeeper and/or accountant. There may not be enough money to maintain this specialist in your enterprise if you have small start-up capital. For this reason, accounting services are becoming more and more popular. The Outsourcing companies offer their professional services for a relatively low price, so this offer is suitable for representatives of both large and small businesses.

If an experienced specialist maintains the company’s books and prepares all the necessary reports, the company will receive the following benefits:

  • Implementation of strategic planning for the development of the organization
  • Increased efficiency management work and decisions
  • Optimization of the usage of financial resources
  • Correctness of bookkeeping records
  • Compliance with tax and other applicable laws
  • Timely payment of taxes and other obligations.

An extremely important task for every bookkeeper is to make sure that no single transaction is missed and that no mistakes (let alone fraud) creep into the financial reports. The Post Closing Trial Balance serves as a helpful effective tool in achieving that.

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Author: Charles Lutwidge

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