Definition of Balance Sheet
The total amounts on a balance sheet show that a company’s assets = liabilities + owner’s (stockholders’) equity.
Definition of Post-Closing Trial Balance
The total amounts on a post-closing trial balance show that the accounts having debit balances = the accounts having credit balances.
Example of Balance Sheet Totals
Assets normally have debit balances. However, there are a few asset accounts that are expected to have credit balances. (These are known as contra asset accounts.) One example is Accumulated Depreciation.
Let’s assume that a company has property, plant and equipment with a cost of $200,000. The accumulated depreciation associated with these assets is $130,000. Therefore, the total assets reported on the balance sheet will report the net amount of $70,000.
Example of Post-closing Trial Balance Totals
Using the amounts above, the company’s post-closing trial balance will report $200,000 in the debit column and $130,000 in the credit column. This will cause a difference of $130,000 between the balance sheet totals and the post-closing trial balance totals.
Other examples of contra accounts that will result in the balance sheet totals being different from the post-closing trial balance totals include:
