Cengage Accounting Exam 1 Practice Test

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The adjusted trial balance is prepared as part of which step in the accounting cycle?

An optional end-of-period spreadsheet is prepared.

The unadjusted trial balance is prepared.

The adjusted trial balance is prepared.

The adjusted trial balance comes from the step where adjustments are made to the accounts. After recording and posting adjusting entries (for items like accruals, deferrals, depreciation, and estimates), you prepare the adjusted trial balance to reflect the updated balances. This verifies that debits still equal credits after the adjustments and provides the correct figures to use when preparing the financial statements. It happens after the unadjusted trial balance and before the post-closing trial balance, which is why the adjusted trial balance is the right answer for this step.

The post-closing trial balance is prepared.