Unadjusted Trial Balance

A trial balance is a list of the balances of ledger accounts of a business at a specific point of time usually at the end of a period such as month, quarter or year.

An unadjusted trial balance is the one which is created before any adjustments are made in the ledger accounts.

The preparation of a trial balance is very simple. All we have to do is to list the balances of the ledger accounts of a business.

Example

Following is the unadjusted trial balance prepared from the ledger accounts of Company A.

Company A
Unadjusted Trial Balance
January 31, 2010
	Debit	Credit
Cash	$20,430
Accounts Receivable	5,900
Office Supplies	22,800
Prepaid Rent	36,000
Equipment	80,000
Accounts Payable		$5,200
Notes Payable		20,000
Utilities Payable		3,964
Unearned Revenue		4,000
Common Stock		100,000
Service Revenue		82,600
Wages Expense	38,200
Miscellaneous Expense	3,470
Electricity Expense	2,470
Telephone Expense	1,494
Dividend	5,000
Total	$215,764	$215,764

Since, in double entry accounting we record each transaction with two aspects, therefore the total of debit and credit balances of the trial balance are always equal. Any difference shall indicate some mistake in the recording process or in the calculations. Although each unbalanced trial balance indicates mistake, but this does not mean that all errors cause the trial balance to unbalance. There are few types of mistakes which will not unbalance the trial balance and they may escape un-noticed if we do not review our work carefully. For example, to omit an entry, to record a transaction twice, etc.

After the preparation of an unadjusted trial balance, adjusting entries are passed.