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In accounting rules, after a trial balance is prepared, not all trial balance figures can be used for financial statements because some account balances, estimates, and account adjustments have not been able to show the correct value according to accounting rules. Therefore, there needs to be a change in the account balance and it must be adjusted in the company's general ledger at the end of the accounting cycle for the purpose of recording the unrecognized revenue or expense for the period. Adjusting journal entries are made to display the adjusted trial balance based on the actual situation. Financial statements based on an adjusted trial balance will reflect the actual state of the company based on accounting rules.
Through the literature study method, the author explains the nature and purpose of an adjusted trial balance, how to record adjusting journal entries, how to prepared adjusted trial balance and their impact on financial statements.