PRC-1 · Chapter 10 · Question 17 of 100
When an entity prepares an 'Adjusted Trial Balance', what does this specific document represent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A list of all ledger accounts and their balances after all necessary period-end adjusting entries have been posted.
Explanation
An adjusted trial balance is prepared after all period-end adjustments (like accruals, prepayments, depreciation) have been journalized and posted to the ledger, proving the mathematical equality of debits and credits before creating financial statements.
More Preparation of Financial Statements MCQs
- Q19Which of the following describes the correct accounting treatment for 'Carriage Outwards'?
- Q20A business discovers an unpaid invoice for electricity amounting to Rs. 5,000 at the end of the year. How should this be recorded?
- Q21At the end of the year, a business has prepaid insurance of Rs. 12,000. Where will this appear in the financial statements?
- Q22Which of the following equations correctly defines 'Gross Profit'?
- Q23What is the primary purpose of the 'Statement of Changes in Equity'?