Unadjusted vs Adjusted Trial Balance
In the world of numbers where accounting rules, a trial balance is one tool that is very essential. One error in the journal and the entire ledger will crumble. A trial balance contains all the accounts in the ledger of a certain business. The lists of accounts may contain assets and liabilities as well as revenues and expenses. Accountants are taking necessary precautions to make the two sides maintain their balance otherwise there is an error in the process, and they have to repeat everything they did again.
An adjusted trial balance is one that presents the total listing of all the account balances and titles in the ledger after all the adjustments have been made in a certain period. On the other hand, it is a wise step to always use an unadjusted trial balance especially after every posting of the accounting transactions in a month. This way, errors can be easily detected on both sides between the debit column and the credit column.
These two kinds of trial balance are both pertinent to auditors and accountants alike. They are both necessary for the in-balance reporting during the end-of-period processing. But no matter how important their roles are, there are still some differences seen between the adjusted and unadjusted trial balance. Some of the common differences are the following:
The first difference is that by the term itself, the adjusted trial balance is the end-product or the final balance after all the adjustments have been made. Unlike in the unadjusted kind, the entries are not final yet. Rather, some of the entries may be balancing entries, accrued revenues, depreciation, and even expenses.
The second difference we might consider is that the unadjusted trial balance is usually used before all the journal entries were entered. Therefore, no adjustments were taken. Meanwhile, an adjusted trial balance is one wherein all the necessary adjustments of the journal entries were already made so that there is a balance between the two sides – the credit and the debit.
Lastly, the adjusted trial balance shows the net or loss of income as part of an additional account. This generalizes the report of the account. The unadjusted kind will simply enter all the necessary figures.
We cannot shrug off the fact that the purpose of having a trial balance in accounting is truly inevitable. It marks the value of both the debit and the credit. With a trial balance, we are ensured that the reporting is accurate. With the help of both the adjusted and unadjusted type of trial balance, the work of a bookkeeper or an accountant become less burdensome.
Summary:
1.Adjusted trial balance is used after all the adjustments have been made to the journal while an unadjusted trial balance is used when the entries are not yet considered final in a certain period.
2.An unadjusted trial balance is basically used before all the adjustments will be made. The adjusted kind, on the other hand, is used when adjusting the two sides of the ledger – the debit and credit.
3.An adjusted trial balance shows an additional account regarding the net/loss of income.