Final answer:
The adjusted trial balance is trusted for financial statement preparation because it includes adjustments for accruals and deferrals, ensuring all transactions are recorded on an accrual basis.
Step-by-step explanation:
The adjusted trial balance is trusted as a reliable source for building the financial statements because it reflects adjustments made for accruals and deferrals. This step is crucial because it ensures that all financial transactions are recorded according to the accrual basis of accounting, which requires that revenue is recognized when earned and expenses are recognized when incurred, regardless of when cash is exchanged. The adjustments include items such as accrued revenues, accrued expenses, deferred revenues, and deferred expenses that have not yet been recorded in the books at the end of the accounting period. Once these adjustments are made, the adjusted trial balance provides a comprehensive listing of all account balances, including both permanent and temporary accounts, which are then used to create an accurate and complete set of financial statements.