What is an unadjusted trial balance?

The unadjusted trial balance is the listing of general ledger account balances at the end of a reporting period, before any adjusting entries are made to the balances to arrive at financial statements. You use the unadjusted trial balance as the starting point for analyzing account balances and making adjusting entries. This report is a standard one that can be issued by many accounting software packages.

If your company creates financial statements on a monthly basis, then you would print an unadjusted trial balance at the end of each month to initiate the process of creating financial statements. Alternatively, if your company only creates financial statements once a quarter, then you would print the unadjusted trial balance on a quarterly basis.

In a computerized accounting system, it may not even be apparent that an unadjusted trial balance is available; instead, you may simply work from the general ledger report, and adjust it as necessary to create financial statements.

An unadjusted trial balance is only used in double entry bookkeeping, where all account entries must balance. If a single entry system is used, it is not possible to create a trial balance where the sum of all debits equals the sum of all credits.

Example of a Trial Balance

In the following example, the unadjusted trial balance is the first column of numbers, while the second column of numbers contains an adjusting entry; the final column combines the first two columns, creating the adjusted trial balance. Debit balances (for assets and expenses) are listed as positive numbers, and credit balances (for liabilities, equity, and revenue) as negative numbers; the debits and credits exactly offset each other, so the total always equals zero.

In an alternative format, the unadjusted trial balance may have a separate column for all debit balances and a separate column for all credit balances. This is useful for ensuring that the total of all debits equals the total of all credits.

ABC Company
Trial Balance
June 30, 20XX

	Unadjusted Trial Balance	Adjusting Entries	Adjusted Trial Balance
Cash	$60,000		$60,000
Accounts receivable	180,000		180,000
Inventory	300,000		300,000
Fixed assets (net)	210,000		210,000
Accounts payable	(90,000)		(90,000)
Accrued liabilities	(50,000)	$(25,000)	(75,000)
Notes payable	(420,000)		(420,000)
Equity	(350,000)		(350,000)
Revenue	(400,000)		(400,000)
Cost of goods sold	290,000		290,000
Salaries	200,000	25,000	225,000
Payroll taxes	20,000		20,000
Rent	35,000		35,000<
Other expenses	15,000		15,000
Total	$0	$0	$0

The adjusting entry in the example is for the accrual of salaries that were unpaid as of the end of June.

Related Topics

General journal
The trial balance
Trial balance errors
What is a post-closing trial balance?
What is an adjusted trial balance?