At the end of each accounting period, the accountant normally needs to produce the financial statements for relevant stakeholder’s usages. And to ensure that financial transactions are arithmetically recording, the trial balance is prepared.
This statement is sometimes print out with the financial statements and sometimes is not. It depends on the company’s practice. In most cases, we use only one template to prepare the trial balance by including both unadjusted and adjusted trial balance.
Sometime it is prepared separately. Before drafting or preparing the financial statements, it is good to have an overall review of the trial balance. This is to make sure that the numbers of items are consistent with our understanding.
There are many reasons why accountants need to make adjustments in the unadjusted trial balance to make the final one called adjusted trial balance. Those adjustments could be accrual expenses, prepayments, as well as other non-cash transactions. Sometimes, it is required by auditors as the result of their auditing.
Adjusted trial balance almost the same as unadjusted trial balance. Sometimes, these two reports are prepared by combine into one report by showing unadjusted and adjusted balance. And sometimes it prepares separately.
The key information included in this report is the company’s name, name of the statement: trial balance, accounting period. It is prepared in four or five columns, and information included in the column is the account name, reference, debit balance, and credit balance.
The closed account ledgers listed in this report normally range from assets accounts to liabilities, equity, and revenues and expenses accounts. This is to help preparer of financial statements could easily be identified which items belong to which class of accounts.
In the accounting equation, assets items are in debt, and liabilities and equities are on the credit side. Revenues items record on the credit side of the trial balance, and expenses items are recorded on the debit side.
The following is the example of adjusted trial balance: