The Purpose of the Post-Closing Trial Balance Is to

question 161

Multiple Choice

The purpose of the post-closing trial balance is to

• A) prove that no mistakes were made.
• B) prove the equality of the statement of financial position account balances that are carried forward into the next accounting period.
• C) prove the equality of the income statement account balances that are carried forward into the next accounting period.
• D) list all the statement of financial position accounts in alphabetical order for easy reference.

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Definitions:

Lockboxes

A service offered by banks to companies for the collection of payment from customers, involving the use of special post office boxes.

Transactions Needs

The requirement for cash or liquid assets for the purpose of meeting immediate expenses or financial obligations.

Collection Float

The time period between when a payment is initiated by a payer and when the funds are available in the payee’s account.

Opportunity Costs

The benefit that is missed or foregone when choosing one alternative over another.