In this trial balance, adjustments are made to initial balance to all the required accounts. Adjustments are made to an initial trial balance to bring the financial statements into compliance with GAAP (Generally Accepted Accounting principles) or IFRS (International Financial Reporting Standards). The adjusted trial balance is an internal report.
The main purposes of the adjusted trial balance are as follows −
Follow the steps given below to prepare the adjusted trial balance −
Step 1 − Write
Step 2 − Prepare three columns
Step 3 − Accounts balanced are recorded by using their account numbers in a chart of accounts.
Step 4 − Total in the debit column should be equal to the total in the credit column.
Step 5 − To comply with accrual rules of accounting, entries are adjusted accordingly (mainly, income and expenses are matched to their respective accounting periods).
Step 6 − Accrued revenues, depreciation, deferred revenues, accrued expenses and deferred expenses are types of adjusting entries