Adjusted Trial Balance Flashcards, test questions and answers

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What is Adjusted Trial Balance?

A trial balance is an accounting report which lists the balances of each account in a company’s general ledger at an exact time. The adjusted trial balance includes all of the adjustments made to the accounts since the original trial balance was created.Adjusted Trial Balance is important because it serves as a tool for review and verification of all entries made into the general ledger that affect income, expenses, assets, liabilities, owner investments or reserves. It also helps identify any errors or irregularities and allows businesses to make sure their books are accurately balanced before preparing their financial statements. The Adjusted Trial Balance contains two columns: one for debits and another for credits. On the left side (debit side) will be listed all debit balances from the accounts included in the general ledger; on the right side (credit side), all credit amounts from those same accounts will be listed. In addition to these two columns, there can also be additional columns listing individual totals for each category such as total assets, total liabilities, and total owners’ equity among others if required by your accounting system setup requirements. To prepare an Adjusted Trial Balance you must first record any journal entries related to adjusting events such as depreciation or amortization adjustments, accruals/deferrals etc., then calculate totals for both sides of every account withing your General Ledger making sure they equal each other (i.e Debit = Credit). Once this is done you may proceed with creating your Adjusted Trail Balance by entering opening balances and adjusted amounts into separate columns corresponding to either debit or credit sides of every relevant account in accordance with rules established by GAAP (Generally Accepted Accounting Principles). Finally after completing data entry process Total Debits should always equal Total Credits meaning that our records have been properly balanced giving us assurance that everything has been accounted correctly prior to preparation of Financial Statements which can now be prepared without worries about inconsistencies due to prior miscalculations.