Can financial statements be prepared directly from the adjusted trial balance?
A) They cannot. The general ledger must be used.
B) Yes adjusting entries have been recorded in the general journal and posted to the ledger accounts.
C) No the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
D) They can because that is the only reason that an adjusted trial balance is prepared.

Question

Quizplus · Accepted Answer

If adjusting entries have been recorded in the general journal and posted to the ledger accounts, then the adjusted trial balance can be used to prepare the financial statements directly without the need to refer to the general ledger. However, if adjusting entries have not been recorded or posted, then the financial statements cannot be prepared directly from the adjusted trial balance. Option A is incorrect as adjusting entries might have been recorded in the general journal and posted to ledger accounts. Option C is incorrect because even though the main purpose of the adjusted trial balance is to prove equality of the ledger balances, it can also be used to prepare financial statements. Option D is incorrect as the adjusted trial balance is prepared to confirm the equality of the total debit and total credit balances in the ledger after adjusting entries are posted, but it is not the only reason for preparing it - it can also be used to prepare financial statements.

Can Financial Statements Be Prepared Directly from the Adjusted Trial