An unadjusted trial balance is a listing of all the accounts in the general ledger along with their debit or credit balances at a specific point in time. It is prepared before any adjusting entries are made to ensure that total debits equal total credits.
5 Must Know Facts For Your Next Test
The unadjusted trial balance includes all transactions recorded up until the date it is prepared, without any adjustments for accrued or deferred items.
It helps to identify any mathematical errors in the double-entry accounting system by verifying that total debits equal total credits.
Preparing an unadjusted trial balance is a preliminary step before creating adjusting entries and ultimately financial statements.
If the totals of debits and credits do not match, it indicates that there may be errors in journal entries or posting to ledger accounts.
The unadjusted trial balance does not reflect accurate financial status as it lacks adjustments for expenses incurred but not yet paid and revenues earned but not yet received.
Review Questions
What purpose does an unadjusted trial balance serve in the accounting cycle?
Why might debits and credits not match on an unadjusted trial balance?
At what stage of the accounting process is an unadjusted trial balance prepared?