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The Main Purpose of Post Closing Trial Balance is to adjust the balances of Permanent Accounts ( Assets , Liabilities & Equity ) on the next accounting period. It does not have temporary accounts ( Revenues & Expenses ) as these are closed to Income Statement or Profit & Loss Account at the end of the accounting period. It checks the Arithmetic Accuracy of Totals of Debit And Credit Sides and hence any error or mistake made in Permanent Accounts is rectified with the help of Post Closing Trail Balance as closing balances of these Types of Accounts are updated after passing Adjusting Entries .

We already studied about Adjusted Trial Balance which is prepared at the time of preparing Adjusting Entries in order the adjust the balance of All Types of Accounts but post closing trial balance is prepared to show only Permanent Accounts which are Assets , Liabilities And Equity and not Temporary Accounts which are Expenses , Revenues and Income Summary Account. So, Trial Balance is prepared after passing Closing Entries in order the verify the balances of Permanent Accounts or to check the totals of Debits with the totals of Credits consisting of these Accounts .         ABC Co.          Post Trial Balance        31 st December, 2017                                            Debit                  ...

Previously, we studied about Trial Balance and how to rectify it, now we are in a position to study about Adjusted Trial Balance. An adjusting trial balance is prepared at the end of accounting period to show adjusted balance of Different Types of Accounts , especially for all Deferrals and Accruals in order update the balances and according to Matching Principle Gaap . It is prepared at the time of recording Adjusting Entries at the end of accounting period. The main purpose of adjusted trial balance is to adjust the closing balances of accounts in order to verify and rectify any errors, mistakes made or frauds concealed in the books of accounts so that true and fair view of financial statements ( Income Statement , Statement of Retained Earnings and Balance Sheet). Adjusted Trial Balance Format Example You May Also Be Interested In, " Post Closing Trial Balance " In adjusted trial balance, one colum n  is for types of a...

In fact, there is no difference between Equity and Stock because these are the same terms used in two different Accounting Systems. The word ”Equity” is used in British Accounting System while “Stock or Capital Stock” is used in American Accounting System. Equity is the rights of the ow ners of the business who invested into the business of a company, especially in the form of shares in order to start or grow it while the Stock or Capital Stock or Stock Equity is the traded or exchanged stock invested in the business of a corporation transacted by the stockholders of a corporation. Examples are shares investments that are traded and exchanged in Stock Exchanges by stockholders of the corporation.

A Balance Sheet Shows financial position of a business’permanent accounts ( Assets , Liabilities & Equity ) on a particular time of a specified date. A Balance Sheet includes items lists of Assets, Liabilities and Equity. It has two sides One is Assets Side and other one is Liabilities & Equity Side. Asset Side is further divided into two parts Current Assets and No n Current Assets / Fixed Assets . It starts with most Most Liquid Assets that comes first. Cash is the most Liquid Asset while Goodwill is the least Liquid side on Balance Sheet according to Liquidity Order. On Liability & Equity Side Liabilities comes first and then Equity Classification comes in the second place. Liabilities are also divided into Current and Long-Term Liabilities. Equity Side includes Shares Capital , Shares Premium, Retained Earnings and other components. Balance Sheet Items Lists include Assets, Liabilities And Equity. The famous items list are shown below:...

Liabilities are the obligations or debts due payable by the business to outsiders i.e., Creditors or Accounts Payable or Suppliers, Banks, Financial Institutions, etc. Examples of Liabilities are Accounts Payable , Accrued Liabilities or Outstanding Expenses , Income / Revenue Received in Advance , Bank Loans, etc. There are three types of Liabilities: 1. Current Liabilities Current Liabilities are used by the business within one year or less. Examples are Accounts Payable / Creditors, Outstanding Expenses, Advance Income / Revenue Received or Prepaid Income, etc. 2. Long-Term Liabilities / No n Current Liabilities Long-Term Liabilities are used by the business for more than one year Examples are Bank Loans, Deferred Liabilities. 3. Contingent Liabilities These are depended upon the happening of uncertain future event that may or may not occur. An entity shall recognize that contingent liability in N otes to the Account...

Tangible Assets are those Assets which we can see and touch. These can be either Current Assets or No n Current Assets / Fixed Assets on the Balance Sheet . Examples are Cash , Inventory / Stock , Land, Buildings, Machinery, Plant & Machinery, Furniture & Fixtures, Office Equipment, etc. The Normal Bala nce for Tangible Assets is Debit, However, when these are acquired or purchased for the use in the business, we Debit these one, but, when we sold out these, then we credit these one. Tangible Assets Journal Entry Suppose ABC Company acquires a Machinery, Costing Rs. 50000 for Cash, then following Entry is passed in the General Journal of the Business:                                            Machinery a/c     50000                       ...

Assets are the resources of the busi ness owned by the business against which the business will expect probable future economic benefits. These are contributed to the business against the claims of Outsiders (External Liabilities) or Internal Ow n ers (Internal Liabilities or Equity or Capital ) of the business according to Accounting Equation i.e., Assets = Liabilities + Owners’Equity . Assets can be divided based on: Time Period, Physical Existence, Future Aspects, Financial Aspects, Investment Aspects, Liquidating Aspects, etc. 1. Current And Fixed Assets The two Primary types of Assets are Current Assets and No n Current Assets / Fixed Assets Long-term Assets.. Current Assets having life equal to one year or less while No n Current Assets have long life usually more than one year. List of Current Assets are (i) Cash (ii Inventory (iii) Accounts Receivable (iv) Prepaid Expenses (V) Prepayments List of N on C...

Liquid Assets are those Assets which are convertible into Cash very quickly. How much an asset convertible into Cash depends upon the Quick Ratio Or Liquidity Ratio that is equal to Quick Assets / Current Liabilities. Examples of Liquid Assets include Cash And Cash Equivalents such as Shares, Commercial Paper, etc., Accounts Receivable , Short-Term Investments, etc. Accounts Receivable is also one of the most liquid assets as it usually converted into cash within an accounting period usually within one month or 3 months. Liquids Assets are recorded on the Balance Sheet as Current Assets and at first place that is the Right Order of Balance Sheet according to Liquidity Order i.e., the most liquid asset comes first then second one most and so on. Liquid Assets are important to a company as it helps its business in meeting its short-term obligations or improve Working Capital that is necessary for the smooth working and Stabilization of the Busi...

Because, Capital  or Equity or Ow ner's Equity is the rights of owners of the business, who invested into the business, especially in case of Sole Proprietorship, to whom the assets of the business are established for the profitable activities ( Revenues & Expenses ) of the business. So, the reporting of capital on Balance sheet is followed by the Business Entity Concept that says Business Transactions must be recorded separately from its owners. Any dealing or exchange by the business with the owner must be recorded with the name of the business as a distinct from its owners. Actually, there are two types of Liabilities  or there are two parties i nvolved against the claim or rights ( Assets ) of the business.  External Liabilities and Internal Liabilities (Equity or Ow ner's Equity) . Internal liabilities are payable by the business to owners of the business and it is al...

Contingent Liabilities are those Liabilities that arise on the happening of future uncertain event that will arise or not. The International Financial Reporting Standards clearly says that the entity shall recog n ize such uncertain event as Contingent Liability i n N otes to the Accounts whether it will no sure that it will be happen or not. However, if there is no chance of occurring that liability i.e., there is very low probability, then the entity should not record that liability in its financial statements. In fact, the standard requires from the business a safe way according to anticipate loss but not for profit concept. If we do not follow this rule, then our Net Profit will be overstated which will be n ot a good sig n for the business if the profit will not happen. On the other hand, if the loss will not happen, then it will cost to us as we already accounted for it. The example of Contingent Liability is the Legal Case. When, it is not clear wheth...