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The first step in preparing a work sheet requires a trial balance to be taken. Next, data should be gathered to perform adjusting entries. Accounts that typically require adjustments are Merchandise Inventory, prepaid expenses, supplies, assets that have to be depreciated, and outstanding liabilities. All these adjustments are posted to the adjustments column of the work sheet, and the debit and credit columns must prove. After the adjusting entries have been entered, the adjusted trial balance is prepared. Balances in this column reflect the correct ending balances of the accounts at the end of the fiscal period.
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