Can Financial Statements Be Prepared Directly from the Adjusted Trial

question 43

Multiple Choice

Can financial statements be prepared directly from the adjusted trial balance?

• A) They cannot. The general ledger must be used.
• B) Yes adjusting entries have been recorded in the general journal and posted to the ledger accounts.
• C) No the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
• D) They can because that is the only reason that an adjusted trial balance is prepared.

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Definitions:

Efficiency

The state of optimizing resources to achieve the highest possible output with the least waste of inputs.

Tax Efficiency

A measure of how much of an investment's return is left after taxes, indicating the effectiveness of minimizing tax liability through investment choices.

Revenue

The total income generated by the sale of goods or services before any costs or expenses are deducted.

FICA Taxes

Taxes levied by the Federal Insurance Contributions Act in the United States to fund Social Security and Medicare programs, deducted from workers' paychecks.