If you ever come across the term unadjusted trial balance term, then it is like the testing of general ledger account balances, and it is at the end of the reporting period which is done by adjusting all the entries which are made to the scales. It is made so that it can be applied on all statements for finance and can be used as the starting point that helps in analyzing all the account balances and thus can adjust the entries.
When a company goes for the creation of all financial statements that too every month, you can see that accountant will be going to print all unadjusted trial balance at the very end of each month. It also helps in initiating all the process in which it can create all.
But when unadjusted trial balance comes, it is only used to enter in double-entry bookkeeping, and all of the account entries must become for the balance. If you look at the single entry system, then it is not like to create any of trial balance where all the sum of debits equals the amount of all credits.
Format of Unadjusted Trial Balance:
If you look at the unadjusted trial balance, you can find that it is shown in almost three columns. The columns by which it is shown in its table are account names, credits balance and the last one is for debited balance. So, all the accounts that come with debit balances are said to be listed in the very left column, and all the accounts come with the credit balances.
The accounts which are listed are seen to be present in the order of the account number. So all the account details are put in the form of numbering in balance sheet and then unadjusted balance helps in displaying all the account details that is present in balance sheet. The balance sheet is seen to be starting with liability, equity as well as assets accounts. Then all of them ends with accounts for all income along with expenses.
So, when you look at the credit and debit column, it is said that you can go for calculation at the very bottom of the trail balance. In accounting equation, all the debit and credit totals are said to be equal and if they are not equal then all the trail balance was supposed to be prepared wrongly and it can be included in journal entries too. Due to all these things it get transferred to accounts of ledger in a proper way.
As mentioned above, the format for all the unadjusted trial balance is said to come with three columns. To make it simple for you in understanding, you need to draw three columns in it. The three columns of the table are named as Account name, debit, and credit. By only doing it, you can get the general format for it.
Here is the sample image for the same that can help you in understanding it more and that to in a secure manner.
Example of It:
If you can’t get enough idea about this all, then here is the best way for you to understand it.
Let us take the unadjusted trial balance that is present in the first column of numbers. Then in the second column of numbers has got all the adjusting entry. In the final column of the table, you can get the combination of all first two columns which can create all the adjusting trail balance. All the debt balances act as the negative numbers and the debits and credits are said to be precisely offset with each other, and at last, the total is always getting with zero.
|Fixed assets (net)||210,000||210,000|
|Cost of goods sold||290,000||290,000|
If you go through the above image, then you can find that in the picture that at last, all the things are equals to zero. By that way, you too need to adjust it so the result will be zero at last.
Purpose of Unadjusted Trial Balance:
If you are in search of knowledge about all its users for unadjusted trial balance, then here is the list of those purpose for you all.
- If the amount of debit has been posted incorrectly as the credit or any credit amount which has been improperly posted as a debit.
- The balances that are present in ledger accounts may have been determined incorrectly.
- Even the scales of the ledger accounts have been said to be copied concerning trial balance.
- If the debit balance has been posted incorrectly in the credit column or even if the credit balance is posted in the debit column of trial balance, then it can be adjusted.
- If the debit and credit column has been totaled incorrectly.
All the above errors that may arise due to the incorrect debit and credit balance may get posted incorrectly, and with the help of it, you can detect or make it right.
Examples of Errors that will not be Detected by Trial Balance:
If you are thinking to get your hand on trial balance and you want to know which is best for it, then here is the list of errors that may get missed by it.
- If the transaction is not analyzed accurately as well as recorded.
- When the transaction is said to be omitted entirely from the journal or even ledger.
- All the credit and debit amounts of the journal entry are understated.
- If all the credit and debit amounts of journal entry are overstated equally.
With all these things which are mentioned above may help you in knowing about the unadjusted trial balance. So, if you have any doubt, then go through the article and knows about different things that an unadjusted trial balance provides.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.