The adjusted trial balance must be prepared before the adjusting entries are made.
A company entered into a 2-month contract for $50,000 on April 1. It earned $25,000 of the contract services in April and billed the customer. The company should recognize the revenue when it receives the customer's check.
An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.
Financial statements can be prepared directly from the information in the adjusted trial balance.