The trial balance prepared after all adjustment entries have been journalized and posted is called the:
A Post-closing trial balance
B Unadjusted trial balance
C General ledger
D Adjusted trial balance
The correct answer and explanation is :
The correct answer is D) Adjusted trial balance.
Explanation:
A trial balance is a financial statement that lists the balances of all accounts in the general ledger to ensure that debits and credits are equal. However, before preparing a financial statement, an adjusted trial balance is often necessary to incorporate all adjustments made after the unadjusted trial balance.
- Unadjusted Trial Balance: This is the initial trial balance prepared before any adjustments are made. It reflects the balances of accounts directly from the general ledger, without considering end-of-period adjustments such as accrued expenses, depreciation, or revenues earned but not yet recorded.
- Adjusted Trial Balance: After posting all necessary adjustment entries (for example, accrued revenues, accrued expenses, depreciation, etc.), an adjusted trial balance is prepared. It reflects the balances after these adjustments, ensuring that debits and credits still balance. This adjusted trial balance is the version used to prepare the financial statements (like the income statement, balance sheet, and statement of cash flows).
- Post-closing Trial Balance: This is the trial balance prepared after the closing entries have been posted to the ledger, which occurs after the financial statements have been prepared. The purpose of the post-closing trial balance is to ensure that all temporary accounts (like revenues and expenses) have been closed out, and only the permanent accounts (assets, liabilities, and equity) remain.
- General Ledger: The general ledger is a complete record of all the accounts used by a company. It includes the balances for assets, liabilities, equity, revenues, and expenses, but it is not the trial balance itself. The general ledger is the source from which a trial balance is created.
Thus, the adjusted trial balance is the correct answer because it is the trial balance prepared after all adjustment entries have been journalized and posted to the ledger.