Question

Which of the following accounts is listed in a post-closing trial balance?

1) Accounts Receivable
2) Prepaid Rent
3) Accumulated Depreciation
4) Sales Revenue

Answer 1

The account listed in a post-closing trial balance is Accounts Receivable, as it is a real account with a balance that carries over into the new period. The bank balance sheet may show funds not actually in the bank due to fractional reserve banking. Loan values in the secondary market fluctuate based on borrower reliability and changes in overall interest rates.

Step-by-step explanation:

Post-Closing Trial Balance Account

The account that would be listed in a post-closing trial balance from the options provided is 1) Accounts Receivable. A post-closing trial balance includes only balance sheet accounts that have balances after the closing entries have been made. As such, real or permanent accounts like Assets, Liabilities, and Equity accounts remain. In this context,

1. Accounts Receivable is an asset account with a balance that carries over into the new accounting period.
2. Prepaid Rent is also an asset account, hence it would normally appear on a post-closing trial balance.
3. Accumulated Depreciation is a contra-asset account related to fixed assets and is also present on the post-closing trial balance.
4. Sales Revenue is a temporary account that would have been closed to the capital or retained earnings account, and so it does not appear on the post-closing trial balance.

Concerning the second part of the question on the bank’s balance sheet and secondary market transactions:

• The money listed under assets on a bank balance sheet may not actually be in the bank due to the practice of fractional reserve banking, where banks lend out the majority of depositor funds while retaining only a fraction of the total deposits as reserves.
• When evaluating loans in the secondary market:
  • a. A loan on which the borrower has been late on payments would typically be valued less due to higher risk of default.
  • b. If interest rates have risen since the loan was made, the existing loan's lower interest rate is less attractive, so it might be purchased for less.
  • c. A loan to a borrower who has declared high profits might be valued more due to lower perceived risk.
  • d. If interest rates have fallen since the loan was made, a loan with a higher rate is more attractive, and may be valued more.