Question

Given an adjusted trial balance how do you calculate profit and the total assets from the adjusted trial balance. There was also another thing she wanted to know, but I can't remember what it was. All she ever showed us how to do was fill out the balance sheet, income statement, and to close accounts. We only brushed over adjusted trial balances and then it was a main part of the test.  

Answer 1

Firstly I define, meaning of Profit- I layman's term it is total earnings of a enterprise. This profit is accounting profit.

Basically trial balance is a statement of all debits and credits in a double entry accounting book which gets equal and these balances come from ledgers. There are 3 types of trial balances:-

1. Normal Trial Balance 2. Adjusted Trial Balance 3. Post closing Trial Balance

1. Normal Trial Balance-means activity recorded from day to day transactions but before making any adjustments.

2. Adjusted Trial Balance- Those transactions which appear after preparing normal trial balance and then journal enrties are passed then posted to ledgers and then proper deibt and credit to trial balance is made.

3. Post closing trial balance-This trial balance is prepared after closing entries have been updated.

Let's understand it using an, Unadjusted Trial BalanceDecember 31, xxxx

Particulars	Debit(INR)	Credit(INR)
Cash	14960
Debtors	6800
Purchases	3000
Furniture and Fixtures	6000
Service equipment	32000
Creditors		18000
Loan Payable		24000
Owner's Capital		26400
Drawing	14000
Revenue		19100
Rent Expenses	3000
Salaries Expenses	7000
Taxes & Rates	740
Total	87500	87500

Following adjustment entries were made at year end:-

Dec. 31	Debtors	600
	Revenue		600
Dec. 31	Other Expenses	3600
	Other Payables		3600
Dec.31	Purchases	1800
	Creditors		1800
Dec.31	Depreciation	1440
	AccumulatedDepreciation		1440

After adjusting these entires a adjusted Trial Balnce is prepared where all the transactions get merged in trial balnce with double entry effect.

Particulars	Debit(INR)	Credit(INR)
Cash	14960
Debtors	7400
Purchases	4800
Furniture and Fixtures	6000
Service equipment	32000
Creditors		19800
Other Payables		3600
Loan Payable		24000
Owner's Capital		26400
Drawing	14000
Revenue		19700
Rent Expenses	3000
Salaries Expenses	7000
Taxes & Rates	740
Other Expenses	3600
Depreciation	1440
Accumulated Depreciation		1440
Total	94940	94940

Now to arrive at profit we make calculation:- (INR)

Revenue 19700

Less- Purchases 4800

Less-Rent Expenses 3000

Less- Salaries Expenses 7000

Less-Taxes & Rates 740

Less-Depreciation 1440

Less- Other expenses 3600

Net Loss (880) INR

Now to arrive at Total Assets from Adjusted trial balance:-

Particulars	INR
Cash	14960
Debtors	7400
Furniture and Fixtures	6000
Service equipment	32000
Less- Accumulated depreciation	(1440)
Total Assets	58920

Hope you got the idea for making calculation to find out profit and assets out of adjusted trial balance.