Final answer:
The post-closing trial balance is prepared to confirm that the general ledger is in balance, and it includes only the permanent accounts with balances carried forward to the next accounting period. It is the final check to ensure all temporary accounts have been closed and that the ledger is ready for the new fiscal period. The correct option is c. Confirm that the general ledger is in balance.
Step-by-step explanation:
The post-closing trial balance is prepared after all adjusting entries have been made and the accounts have been closed. This process is done at the end of the accounting period to help ensure that the books are ready for the next period. The correct answer to the student's question is, 'Confirm that the general ledger is in balance.' Contrary to the other options, the post-closing trial balance does not summarize temporary accounts, determine account balances after adjusting entries (this is done in the adjusted trial balance), or list accounts that must be closed (this is known before the trial balance is prepared).
The post-closing trial balance includes only the permanent accounts (assets, liabilities, and equity) that still have balances after the closing entries have been posted. These balances are carried forward into the next accounting period. Temporary accounts, such as revenue, expenses, and dividends, should all have zero balances at this point because their balances have been transferred to the Retained Earnings account during the closing process.
Preparing a post-closing trial balance is an essential step in the accounting cycle. It verifies the equilibrium of the debits and credits after the closing process, which is crucial for the integrity of a company's financial records. If the trial balance does not balance, then there must be an error, which should be investigated and corrected before moving on to the next accounting period. This step also sets the stage for compiling financial statements for the new fiscal period.