Question

What differences are there between the trial balance before closing and the trial balance after closing with respect to the following accounts?

a) Accounts payable

b) Expense accounts

c) Revenue accounts

d) Retained Earnings account

e) Cash

Short answer

1. There will not be any effectonaccounts payable.
2. Balances remain available in these accounts before closing, and after closing,the balances become zero.
3. Balances are present in these accounts before closing, but after closing, the balances become zero.
4. Balances remain in the account before closing,andafter closing, the balances get increased or decreased.
5. There will not be any effect oncash.

Step-by-step solution

Meaning of trial balance

The trial balance is the sum total of all the general ledger balances included in the business ledger. In the trial balance,the debit and credit sides will always be equal. Moreover, all the balances of the ledger are posted either on the debit or credit side of the statement.

Accounts payable

There will be no variation in the trial balance before closing and as well as after closing in relation to accounts payable.

Expense accounts

Before the closing of the trial balance, the balances are present in the expense accounts. However, after the closing of trial balance, the balances become nil.

Revenue accounts

Before the closing of the trial balance, the balances are present in the revenue accounts. However, after the closing of trial balance, the balances are not available in these accounts.

Retained earnings account

Before the closing of the trial balance, the balances exist in the expense accounts irrespective of the net income or dividends or net loss for a particular period. The balance increases or decreases due to the amount of net income or loss, respectively, and decreases by the dividend stated.

Cash

There will be no variation before and after the closing of trial balance in relation to the cash account.