A Trial balance is a sheet that contains a record of all types of income and balance sheets. And it is shown at the end of the accounting period or session, containing all the records of profit and loss statements and expenditure lists. The trial balance sheet is categorized as a list of all ledger accounts.
In accounting fundamentals, Trial balance is divided into three subcategories which are Post-closure, Adjusted, and Unadjusted trial balances. During the making of the Trial balance sheet, many methods are used. Some of them are the Gross, Net balance, and amalgam methods.
Key Takeaways
- An unadjusted trial balance is the initial list of balances of all ledger accounts, whereas an Adjusted trial balance is a list of balances after necessary adjustments have been made.
- An unadjusted trial balance doesn’t ensure the accuracy of financial statements, whereas an Adjusted trial balance ensures the accuracy of financial statements.
- An unadjusted trial balance is prepared before adjusting entries, whereas an Adjusted trial balance is prepared after adjusting entries.
Unadjusted vs Adjusted Trial Balance
The difference between Unadjusted and Adjusted Trial Balances is that Unadjusted is the main account trial balance list of ledger accounts that are assembled without making any end changes or modifications. Whereas, Adjusted Trial Balance is a trial balance where you can make changes or modifications after the closure of the accounting period also.
An unadjusted Trial balance is used to record only data regarding account balances. As data in it cannot be modified or changed, this trial balance is less accurate than the Adjusted Trial balance. It can also be referred to as the summary of all account balances.
Adjusted Trial balance is a combined sheet in which income and balance sheets data are stored in a column manner. This trial balance provides an adjustment facility or modification facility even at the end period of accounting. It is the most accurate Trial balance among all.
Comparison Table
| Parameters of Comparison | Unadjusted Trial Balance | Adjusted Trial Balance |
|---|---|---|
| Definition | This trial balance is a combined balance sheet in which all types of income statements or balance sheets are added. | Adjusted Trial balance is also a combined balance sheet, but changes can be made to it at any time. |
| Position | The position or the place of the Unadjusted Trial balance sheet comes in between the ledger and the Adjusted trial balance. | The Position or the place of Adjusted Trial balance is above all the balance sheets. |
| Entries | In the Unadjusted Trial balance sheet, only account balances are considered and entered. | In the Adjusted Trial balance, all types of financial entries and account balances are entered. |
| Aim | Unadjusted Trial balance is used to check only calculation accuracy. | Adjusted Trial balance is used to check both the accounting and calculation accuracy. |
| Preparation method | The Unadjusted Trial balance sheet is always divided into columns. | Adjusted Trial balance also possesses column format, but extra columns are also added for end-time entries. |
| Adjustments | It does not offer an adjustment facility as once it is prepared it cannot be changed. | It offers adjustment or modification facilities even at the last accounting period also. |
What is Unadjusted Trial Balance?
An unadjusted Trial balance is the first step of analyzing and making changes to account balances. It is prepared and shown at the end of the accounting period. After the preparation of this trial balance, no changes are made to the data or the entries recorded in that balance sheet.
An Unadjusted Trial balance report is a standard report that can be generated by using various software applications available on the internet. These software applications are specially made for making or preparing accurate accounting reports that clearly show the benefits.
Many small companies are there that prepare an Unadjusted Trial balance manually. The trial balance generation depends on the company’s financial statement preparation time.
What is Adjusted Trial Balance?
Adjusted Trial balance is a summary of all current account balances or income statements. This trial balance sheet can be adjusted and modified at any period. It is said to be the most suitable in accounting as it offers flexibility in the preparation method and end-time changes.
Adjusted Trial balance maintains the accuracy of the balance sheet or accounting balances as it offers modifications. Several types of columns are added during the sheet preparation, and the sheet format used is columnar. This trial balance includes adjustment entries, account balances, depreciation calculations, etc.
The main aim of using the Adjusted Trial balance method is to improve the balances and correct any inaccuracy that may have occurred due to calculation mistakes or any other mistakes.
Main Differences Between Unadjusted and Adjusted Trial Balance
- An Unadjusted Trial balance is a combined balance sheet in which all types of income statements and balance sheets are added. On the other hand, the Adjusted Trial balance is an integrated balance sheet, but changes can be made to it at any time.
- Adjusted Trial balance contains all types of financial entries and account balance entries. Whereas in the Unadjusted Trial balance sheet, only account balances are considered and entered.
- The Unadjusted Trial balance sheet is always divided into columns. While the Adjusted Trial balance has a column format, extra columns are added for end-time entries.
- An unadjusted Trial balance is only used to check calculation accuracy. Whereas, Adjusted Trial balance can be used to check both the accounting and calculation accuracy.
- An unadjusted Trial balance does not offer an adjustment facility; it cannot be changed once it is prepared. In contrast, the Adjusted Trial balance offers adjustment or modification facilities even during the last accounting period also.
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I’m not sure if I agree with this article. I think unadjusted trial balance is more suitable and convenient.
I see your point, but I beg to differ. Adjusted trial balance provides flexibility and helps maintain accuracy of the balance sheets.
Very informative article. I did not know about adjusted and unadjusted trial balance. I got to learn a lot about them, and their differences.
This article was helpful in learning more about unadjusted and adjusted trial balance. Good job!
I found the article really helpful, the writer did a great job explaining everything
The definitions and examples given were in depth and easy to understand
The comparison table provided in the article was extremely helpful in understanding the differences between unadjusted and adjusted trial balance.
This article helped me understand the differences between unadjusted and adjusted trial balance. I have a better understanding of the topic now.
Really appreciated the depth of information provided in this article. Great read!