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:

Time-series Analysis

A statistical technique that analyzes a series of data points, usually collected at consistent intervals, to identify trends, cycles, or seasonal variations.

Trend Income Statements

Financial statements that show the progression of key income statement figures over a series of periods, allowing for trend analysis.

Sales

The revenues earned from selling goods or services over a period of time.

Preferred Stock Dividends

Dividends paid on preferred shares of a company which typically have a fixed dividend rate and priority over common stock in dividend payments.