The reason for preparing the adjusted trial balance is to ensure the adjusting entries were done correctly. This is the last step before preparing financial statements that are used by you, your creditors and your shareholders to monitor the performance of your business.

What is the need to prepare trial balance?

Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers.

What are the major causes of a trial balance out of balance?

Trial balance errors

• Entries made twice. If an entry is made twice, the trial balance will still be in balance, so that is not a good document for finding it.
• Entries not made at all.
• Entries to the wrong account.
• Reversed entries.
• Transposed numbers.
• Unbalanced entries.

When do you need an adjusted trial balance?

An adjusted trial balance is created after all adjusting entries have been posted into the appropriate general ledger account. The adjusted trial balance is completed to ensure that the period ending financial statements will be accurate and in balance. In addition, an adjusted trial balance is used to prepare closing entries.

How is the trial balance in a double entry account book?

In a double-entry account book, the trial balance is a statement of all debits and credits. Since each transaction is listed in a way to ensure the debits equaled credits, the quality should be maintained in the general ledger and the trial balance. If the sum of debits does not equal the sum of credits, an error has occurred and must be located.

How to calculate adjusted trial balance for printing plus?

For Printing Plus, the following is its January 2019 Income Statement. Revenue and expense information is taken from the adjusted trial balance as follows: Total revenues are $10,240, while total expenses are $5,575. Total expenses are subtracted from total revenues to get a net income of $4,665.

When to prepare an adjusted trial balance for marketing consulting service?

Required: Prepare an adjusted trial balance of Marketing Consulting Service Inc. on December 31, 2015. The accounts that have been affected as a result of making adjusting entries for the month of December are shown in red color in the adjusted trial balance.