Adjusted Trial Balance

• If you pore over a company's trial balance, you see all financial accounts that make up its bookkeeping base, also referred to as a general ledger. Financial accounts range from equity items and revenues to expenses, assets and liabilities. A trial balance primarily serves to ensure that total debits equal total credits -- or the total amount in the "Dr." column equals the "Cr." column total, as you'd see in some companies' accounting records. An adjusted trial balance incorporates period-end modifications -- adjustments -- that accountants post for data completeness and accuracy. Adjustments touch on things like unearned revenue, prepaid expenses and noncash charges -- such as depreciation, amortization and depletion.
  
  

Retained Earnings

• Retained earnings represent profits a business hasn't distributed over the years. Also known as accumulated revenue or undistributed profits, retained earnings speak to corporate financial soundness, with an emphasis on long-term economic stability. Net income increases retained earnings, whereas net losses have an opposite effect. Investors read a company's retained earnings statement to figure out how it's faring overall, determining whether the earnings number should give them solace or prompt a diminution of profit expectations.
  
  

Connection

• A trial balance has nothing to do with the retained earnings master account. It also doesn't affect accumulated profits directly. However, there are instances in which both data synopses interact. Retained earnings come from revenues and expenses, both of which make up a trial balance. The last item also underlies the basic accounting equation mandating that total assets equal total debts plus total equity -- of which retained earnings are part.
  
  

Financial Reporting

• Accumulated profits are integral to a statement of changes in shareholders' equity, which finance people often refer to as a statement of equity or equity report. Retained profits also make up a balance sheet, the other name for a statement of financial position, or statement of financial condition. In addition to a balance sheet and an equity statement, an adjusted trial balance helps accountants prepare an accurate and complete statement of cash flows and a report on profit and loss. The last data summary also goes by the names "P&L," "statement of income" and "income report."