 Preparing the adjusted trial balance is the sixth step in the accounting cycle. We learned earlier that a trial balance is a list of company accounts and their ending ledger balances. The adjusted trial balance is prepared after our accounts have been adjusted. It represents the best information a company has to prepare financial statements. It is the basis for financial statement preparation. Let's remember that the trial balance lists accounts in the following order, assets, liabilities, equity, revenues, and expenses. Here we have an unadjusted trial balance. We make the adjusting journal entry and post to the ledger. Then the ending ledger balance after adjustment is used to prepare the adjusted trial balance. In this case, service revenue had a zero beginning balance and, after adjustment, now has a credit balance of $162,500. So then the adjusted trial balance looks like this. Recall that the adjusted trial balance represents the best information we can provide to our investors and creditors. We will use the adjusted trial balance to prepare the financial statements. For example, revenues and expenses will go to the income statement and produce net income. Retained earnings, dividends if this company had any, and net income from the income statement will go to the statement of retained earnings and produce ending retained earnings. Assets, liabilities, common stock, and ending retained earnings from the statement of retained earnings will go on the balance sheet. We will learn more about financial statements in Accounting Cycle Step 7, preparing financial statements.