Question

3. Once the adjustments are made, verbally explain what do you do with the ATB   

Create financial statements (FS) from the Adjusted Trial Balance (ATB)

1. Verbally name the FS’s created from the ATB

2. Verbally explain how each FS’s are created from the ATB

3. For each of the FS’s,
   1. Verbally list the major sections
   2. Verbally name the accounts in each section

Answer 1

Adjusted Trial Balance ( ATB) mean " adding those entries is to correct errors in the initial version of the Trial Balance ( TB) and to prepare financial statement into compliance with an accounting framework Normally need to ajusted trial balance eithee USGAAP or IFRS

Adjusted Trial Balance is essentially summary of balance listing of all accounts in the gebnral ledger - normally it does not cover detail trasnaction . This ATB is not part of the financial Statement

Create financial statements (FS) from the Adjusted Trial Balance (ATB)

1. Verbally name the FS’s created from the ATB

1. Verbally explain how each FS’s are created from the ATB

1. For each of the FS’s,

Please see below step wise analysis on the above matter :

A financial statement is mainly consist of companies revenue and expenses and the resulting Net Income or Loss

Step 1 – Collect / gathered all necessary Information – Start working with Adjusted Trial Balance ( ATB) mean Trial balance after all relevant adjustment .

Step 2 – Heading of accounts – heading of the financial statement is made up three lines like “ the company name” . Second line “ the title of the report “ and third line represents “ The period reported”

Step 3- Report all revenue accounts need ti know multiple revenue accounts from ATB like Service revenue , sale, professional fees , Interest Income , any other Income

Step 4 – Record all expenses- Normally from ATB , need to account all relevant expenses like Salary , Wages , Rent , utility == mean direct Operation expenses , Indirect support cost , General Admin cost , Selling cost etc.

Step 5- After record of Revenue and expenses , need to compute the “net Income”