Final answer:
Financial statements are based on the adjusted trial balance, which is prepared post adjustments for accruals, deferrals, depreciation, and other year-end adjustments. Option D is correct answer.
Step-by-step explanation:
Financial statements are essential reports that give stakeholders an insight into a company's financial performance and position at a point in time. There are three core financial statements: the balance sheet, income statement, and cash flow statement. These statements are prepared using information from different trial balances that are created throughout the accounting cycle. The question asks from which trial balance financial statements can be prepared. Let's explore the options given.
The post-closing trial balance is prepared after closing entries are made and is used to verify that debits equal credits after these entries. However, it only contains balance sheet accounts since temporary accounts have been closed.
Reversing trial balance is not a standard term in accounting. It might be a misunderstanding of reversing entries, which are made at the beginning of a new accounting period to reverse or cancel out adjusting entries that were made at the end of the previous period.
The trial balance is an initial list of all accounts and their balances before adjustments are made. Because it doesn’t reflect the adjustments for accruals, deferrals, depreciation, and other year-end accounting adjustments, it is not used for preparing the final financial statements.
The adjusted trial balance is prepared after all adjusting entries have been posted and shows the balances of all accounts that will be reported on the financial statements. It is this balanced trial balance that is the basis for preparing the official financial statements.
Based on the options, the correct one that is used for preparing financial statements is option D. adjusted trial balance.