An adjusted trial balance is a key accounting tool that lists all general ledger account balances after adjusting entries are made at the end of the period. The primary purpose is to ensure that the total debits and credits are equal, confirming that the accounts are properly adjusted and ready for financial statement preparation.

Steps for Preparing an Adjusted Trial Balance

Start with the Unadjusted Trial Balance

This lists all account balances before any adjustments are made.

Post Adjusting Entries

Adjust accounts for accrued revenues, expenses, depreciation, and deferrals. This ensures that revenues and expenses are matched with the correct period.

Compile the Adjusted Balances

After adjustments, the new balances for all accounts are compiled into the adjusted trial balance.

Check for Balance

Ensure that the total debits equal the total credits. This is crucial for accurate financial reporting.

Purpose of the Adjusted Trial Balance

• Preparation of Financial Statements: The adjusted trial balance serves as the foundation for preparing the company's balance sheet, income statement, and statement of retained earnings.

• Verification of Accuracy: It ensures that all transactions are accounted for correctly after adjustments, giving an accurate snapshot of the company’s financial position.

While the adjusted trial balance is not a formal financial statement, it is essential in ensuring that all adjustments are properly recorded before moving on to final statements​​​.