Trial Balance | Post closing trial balance | Adjusted Trial Balance | Unadjusted Trial Balance | Financial Accounting | Trial balance example | Management Notes
Trial Balance Definition
A trial balance is defined as a bookkeeping worksheet or a statement in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. Trial Balance is a list in which balances of the ledger accounts are shown to test the arithmetical accuracy of the records of financial transaction in book of account. If the sum of the debit and credit columns of trial balance is equal , it is assumed that the posting to the ledger accounts is accurate. A trial balance is used as a connecting link between ledger and final accounts.
Objectives of Preparing Trial Balance
Following are some of the objectives of preparing Trial Balance:
- To Ascertain the Arithmetical Accuracy of Ledger Accounts
- Completion of Double Entry
- Ledger Account Balances
- To help in the preparation of Final Accounts
Trial Balance Format
|S.N.||Account Heads (Particulars)||L.F.||Debit (Amount in Rs)||Credit (Amount in Rs)|
Difference between Unadjusted Trial Balance and Adjusted Trial Balance
Unadjusted Trial Balance
Adjusted Trial Balance
|Definition||Unadjusted trial balance is the first list of ledger account balances, compiled at the end of a reporting period before any adjusting entries are made.||Adjusted trial balance is the trial balance compiled after considering adjustment entries at the close of the accounting period.|
|Adjusting Entries||Unadjusted trial balance does not include any adjustment entries.||Adjusted trial balance includes all adjustment entries.|
|Purpose||Unadjusted trial balance is prepared to check arithmetical accuracy of ledger accounts and to check that the books of accounts are in balance.||Adjusted trial balance has a wider purpose of checking accounting accuracy of the books of accounts. It incorporates adjustments to align the accounting entries with accounting standards and principles.|
|Accuracy||Unadjusted trial balance are Less accurate compared to Adjusted trial balance.||Adjusted trial balance are more accurate compared to Unadjusted trial balance.|
|Versions||There is a single version of Unadjusted trial balance.||There are multiple versions of Adjusted trial balance.|
Trial Balance MCQs
Which of the following steps must be completed before preparing the adjusted trial balance?
When is a trial balance usually prepared?
Which of the following errors will cause the trial balance totals to be unequal?
Which of the following accounts will be included in a post-closing trial balance?
What is the first account that should be listed in the post closing trial balance?
There is no question
Which of the following statements is true of a trial balance?