Can Financial Statements Be Prepared Directly from the Adjusted Trial

question 40

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:

Mark-Up

The amount added to the cost price of goods to cover overhead and profit; a percentage over cost.

Impairment Loss

A decrease in the recoverable amount of an asset below its carrying amount, leading to a reduction in the value recorded on the balance sheet.

Carrying Value

The net book value of an asset or liability on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Bond Discount

is the difference between the face value of a bond and its selling price when the bond is sold for less than its face value.