A Trial balance is a sheet that contains a record of all types of income and balance sheets. And it is shown at the end of the accounting period or session containing all the records of profit and loss statements and expenditure lists. The trial balance sheet is generally categorized as a list of all ledger accounts.
In accounting fundamentals, Trial balance is generally divided into three subcategories which are Post-closure, Adjusted, and Unadjusted trial balances. During the making of the Trial balance sheet, many methods are used. Some of them are the Gross method, Net balance method, and amalgam method.
Unadjusted vs Adjusted Trial Balance
The main difference between Unadjusted and Adjusted Trial Balance is that Unadjusted is the main account trial balance list of ledger accounts that are assembled without making any end changes or modifications. Whereas, Adjusted Trial Balance is a trial balance where you can make changes or modifications after the closure of the accounting period also.
Unadjusted Trial balance is used to record only data regarding account balances and, as data in it cannot be modified or changed, this trial balance is less accurate as compared to Adjusted Trial balance. It can also be referred to as the summary of all account balances.
Adjusted Trial balance is a combined sheet in which data regarding income sheets and balance sheets are stored in a column manner. This trial balance provides an adjustment facility or modification facility even at the end period of accounting. It is the most accurate Trial balance among all.
Comparison Table Between Unadjusted and Adjusted Trial Balance
|Parameters of Comparison||Unadjusted Trial Balance||Adjusted Trial Balance|
|Definition||This trial balance is a combined balance sheet in which all types of income statements or balance sheets are added.||Adjusted Trial balance is also a combined balance sheet, but changes can be made to it at any time.|
|Position||The position or the place of the Unadjusted Trial balance sheet comes in between the ledger and the Adjusted trial balance.||The Position or the place of Adjusted Trial balance is above all the balance sheets.|
|Entries||In the Unadjusted Trial balance sheet, only account balances are considered and entered.||In the Adjusted Trial balance, all types of financial entries and account balances are entered.|
|Aim||Unadjusted Trial balance is used to check only calculation accuracy.||Adjusted Trial balance is used to check both the accounting and calculation accuracy.|
|Preparation method||The Unadjusted Trial balance sheet is always divided into columns.||Adjusted Trial balance also possesses column format, but extra columns are also added for end-time entries.|
|Adjustments||It does not offer an adjustment facility as once it is prepared it cannot be changed.||It offers adjustment or modification facilities even at the last accounting period also.|
What is Unadjusted Trial Balance?
Unadjusted Trial balance is the first step of analyzing and making changes to account balances. It is prepared and is shown at the end of the accounting period. After the preparation of this trial balance, no changes are made to the data or the entries recorded in that balance sheet.
An Unadjusted Trial balance report is a standard report that can be generated by using various software applications available on the internet. These software applications are specially made for making or preparing accurate accounting reports that clearly show the benefits.
Many small companies are there that prepare an Unadjusted Trial balance manually. The trial balance generation depends on the companies financial statement preparation time.
What is Adjusted Trial Balance?
Adjusted Trial balance is a summary of all current account balances or income statements. This trial balance sheet can be adjusted and modified at any period. It is said to be the most suitable in accounting as it offers flexibility in the preparation method and end time changes.
Adjusted Trial balance maintains the accuracy of the balance sheet or accounting balances as it offers modifications. Several types of columns are added during the sheet preparation and, the sheet format used is columnar. The entries in this trial balance include adjustments entries, account balances, and depreciation calculations, etc.
The main aim of using the Adjusted Trial balance method is to improve the balances and correct any inaccuracy that may have occurred due to calculation mistakes or any other mistakes.
Main Differences Between Unadjusted and Adjusted Trial Balance
- An Unadjusted Trial balance is a combined balance sheet in which all types of income statements and balance sheets are added. On the other hand, Adjusted Trial balance is an integrated balance sheet, but changes can be made to it at any time.
- Adjusted Trial balance contains all types of financial entries and account balances entries. Whereas in the Unadjusted Trial balance sheet, only account balances are considered and entered.
- The Unadjusted Trial balance sheet is always divided into columns. While Adjusted Trial balance possesses column format, but extra columns are also added for end-time entries.
- Unadjusted Trial balance is only used to check calculation accuracy. Whereas, Adjusted Trial balance can be used to check both the accounting and calculation accuracy.
- Unadjusted Trial balance does not offer an adjustment facility as once it is prepared, it cannot be changed. While the Adjusted Trial balance offers adjustment or modification facilities even at the last accounting period also.
The trial balance sheet method keeps the data safe, and also, if someone wants to see the old documents or income statements, they can easily get that available. There are a total of three methods of making a trial balance sheet and, among them, Adjusted Trial balance is mostly preferred because of the modification flexibility.
Unadjusted and Adjusted Trial balances are mainly available in column format sheets. Among both, the trial balances Unadjusted trial balance provides less accuracy, and it is not suitable for varying account entries as no modifications can be made to it after its preparation.