An Adjusted Trial Balance Is Prepared to

question 18

Multiple Choice

An adjusted trial balance is prepared to

• A)test that the ledger is in balance after the accounts have been adjusted.
• B)facilitate preparation of the adjusting entries.
• C)both test that the ledger is in balance after the accounts have been adjusted and facilitate preparation of the financial statements.
• D)facilitate preparation of the financial statements.

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Definitions:

Bad Debts Expense

The portion of receivables that a company anticipates will not be collected and is thus written off as an expense in the financial statements.

Operating Expense

Incurred expenses that are related to a company's main operational activities, excluding cost of goods sold and capital expenditures.

Statement of Income

A financial statement that reports a company's financial performance over a specific period, showing income, expenses, and net profit or loss.

Allowance for Doubtful Accounts

An estimation of the accounts receivable that may not be collected due to customer defaults.