Adjusted Trial Balance

The company has journalized and posted all the adjusting entries. The next step is, it prepares another trail balance from the ledger accounts. This is called as an adjusted trail balance. Its main purpose is to prove the equality of the total credit balances and the total debit balances in the ledger after all the adjustments are made. The accounts in the adjusted trial balance include all information that the business organization has to prepare financial statements.

The adjusted trial balance comprises several transactions which are used to reallocate values and correct errors. The trial balance is the finished list of all the journal ledger accounts which is utilized to find out the business activities and their values. A trail balance is used to make the cash flow documents, balance sheet and income statement. All these documents form the complete financial repots which are given to the business owners, financial companies and investors. When a business is established or commenced, the general ledger account is created in order to account for various activities which are needed to run a company or business. The original account names could differ, however the main purpose of the accounts are standard.  Every company has to keep a track of the accounts payable, cash, accounts receivable, loans, amount invested in the company, payroll etc.

At the end of the accounting year, the trial balance is checked in order to make sure that the values in every account are complete and accurate. At this time, omissions and errors could be identified.  A journal or list of errors managed and created by the accountant as past of the assessment process. The impact of all these changes could be seen in the adjusted trial balance.

Questionnaire:

• What is trail balance?
• What is adjusted trial balance and why it is prepared?