Q 19RQ - Horngren'S Financial And Managerial Accounting

Question

When is an adjusted trial balance prepared, and what is its purpose?

Step-by-Step Solution

Answer

The adjusted trial balance is prepared after the adjusting entries have been journalized and posted to the accounts. Total debits should be equal to the total credits, is the purpose.

Step-by-Step Solution Step 1: Explanation on Adjusting Entries

These are the year end entries made to record the accrued revenues and expenses of the business. 

Step 2: Explanation on Adjusted Trial Balance

Adjusted trial balance is prepared once the adjusting entries are recorded in the books of accounts. It shows the final balances of all the accounts, including the accounts affected by recording adjusting entries.