LO 5.2 Which of these accounts is included in the post-closing trial balance?Choose one answer from the options below.A. Sales RevenueB. Salaries ExpenseC. Retained EarningsD. Dividends
Question
LO 5.2 Which of these accounts is included in the post-closing trial balance?Choose one answer from the options below.A. Sales RevenueB. Salaries ExpenseC. Retained EarningsD. Dividends
Solution
The correct answer is C. Retained Earnings.
Here's why:
A post-closing trial balance includes only balance sheet accounts. Balance sheet accounts are the ones that carry forward to the next accounting period. These accounts include assets, liabilities, and equity accounts.
Option A, Sales Revenue, and Option B, Salaries Expense, are income statement accounts, not balance sheet accounts. They are closed at the end of the accounting period, so they would not appear in the post-closing trial balance.
Option D, Dividends, is a temporary account that is closed to Retained Earnings at the end of the accounting period. Therefore, it would not appear in the post-closing trial balance.
Option C, Retained Earnings, is a balance sheet account. It is an equity account that shows the accumulated earnings of the company that have been retained (i.e., not paid out as dividends) to reinvest in the business or pay off debts. Therefore, it would appear in the post-closing trial balance.
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