Final answer:
It is true that financial statements can be prepared directly from the adjusted trial balance, as this document presents the account balances after adjustments, which are used to create the income statement, balance sheet, and statement of cash flows.
Step-by-step explanation:
The statement 'Financial statements can be prepared directly from the adjusted trial balance' is true. The adjusted trial balance is a statement that lists all accounts and their final balances after all adjustments have been made at the end of an accounting period. These adjustments include accrued revenues, accrued expenses, depreciation, and other adjustments needed to ensure that the financial statements are in compliance with the accounting principles.
Once the adjusted trial balance is correctly prepared, it serves as the primary basis for the preparation of financial statements, which include the income statement, balance sheet, and statement of cash flows. Each line item on the financial statements corresponds to an account from the adjusted trial balance, ensuring that financial data is reflected accurately and comprehensively.
It's essential for students studying accounting to understand the flow of information from the adjusted trial balance to the financial statements, as this reflects the culmination of the accounting cycle.