Question

-Can financial statements be prepared without adjusting entries?

-What impact will the omission of adjusting entries have on the financial statements?

-Do companies use the unadjusted trial balance or the adjusted trial balance to prepare financial statements?

Answer 1

- No, Financial Satement cannot be prepared without taking consideration of adjusting entries. It is very necessary to record adjusting entries before prepration of financial statement to get a true and fair view or result.

- If adjusiting entry will be ommissed then the financial statement will not give true and fair result that does not includes the effect of Depreciation, Accrued Revenue, Accrued expenses, Prepaid expense etc.

- Companies always use the adjusted trial balance to prepare financial statement of company because that consider all transactions.

I hope this clear your doubt.

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