What is the purpose of the adjusted trial balance?

• A. To verify that the debits and credits balance
• B. To determine net income directly from the trial balance
• C. To list all assets and liabilities
• D. To show cash flows for the period

Answer: (A)

The adjusted trial balance is used to confirm that the accounting equation remains in balance after all adjusting entries are posted. It lists every account with its updated balance so that total debits still equal total credits, providing a final check before the financial statements are prepared. This ensures the numbers going into the income statement and the balance sheet are accurate after adjustments. It isn’t meant to directly determine net income from a single step, nor to list assets and liabilities only, nor to show cash flows—that information comes from the income statement, balance sheet, and cash flow statement, respectively.