Question

The account balances on the Trial Balance displayed on textbook page 354 are different than the Adjusted Trial Balance on page 361. What are the differences and why do they exist?

Answer 1

The differences between the Trial Balance and Adjusted Trial Balance are due to end-of-period adjustments, such as accrued revenues and expenses, which are made before the financial statements are prepared.

Step-by-step explanation:

The difference between the Trial Balance and the Adjusted Trial Balance typically arises due to adjustments made for accruing revenues and expenses, depreciation, inventory variations, and any errors found. The Trial Balance is an internal report showing all the debit and credit balances of a company's accounts before adjustments. The Adjusted Trial Balance includes these balances after end-of-period adjustments are made.

These adjustments are necessary to prepare financial statements that are in accordance with accounting principles. For example, a company might recognize revenue that was earned but not yet recorded (accrued revenues) or might adjust for expenses that have been incurred but not yet recorded (accrued expenses).