Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Unadjusted vs Adjusted Trial Balance

Financial Accounting

3. Accrual Accounting Concepts

Unadjusted vs Adjusted Trial Balance

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Multiple Choice

Which of the following statements about an adjusted trial balance is correct?

An adjusted trial balance includes the effects of all adjusting entries made at the end of the accounting period.

An adjusted trial balance is prepared before any journal entries are recorded.

An adjusted trial balance only lists accounts that have changed during the period.

An adjusted trial balance is used to record transactions in the general ledger.

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Verified step by step guidance

Understand the purpose of an adjusted trial balance: It is a financial report prepared after all adjusting entries have been made at the end of the accounting period. Its primary purpose is to ensure that the total debits equal the total credits after adjustments.

Clarify the role of adjusting entries: Adjusting entries are made to account for accrued revenues, accrued expenses, prepaid expenses, depreciation, and other adjustments necessary to reflect the true financial position of the company.

Evaluate the first statement: 'An adjusted trial balance includes the effects of all adjusting entries made at the end of the accounting period.' This is correct because the adjusted trial balance reflects all adjustments made to the accounts.

Analyze the second statement: 'An adjusted trial balance is prepared before any journal entries are recorded.' This is incorrect because the adjusted trial balance is prepared after journal entries, including adjusting entries, have been recorded.

Review the third and fourth statements: 'An adjusted trial balance only lists accounts that have changed during the period' and 'An adjusted trial balance is used to record transactions in the general ledger.' Both are incorrect because the adjusted trial balance lists all accounts, not just those that changed, and it is not used to record transactions but to verify the accuracy of the accounts.