Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Unadjusted vs Adjusted Trial Balance

Financial Accounting

3. Accrual Accounting Concepts

Unadjusted vs Adjusted Trial Balance

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Multiple Choice

Which of the following best describes the primary difference between an unadjusted trial balance and an adjusted trial balance?

An unadjusted trial balance is used for external reporting, while an adjusted trial balance is used only for internal purposes.

An unadjusted trial balance is prepared before adjusting entries are made, while an adjusted trial balance is prepared after all adjusting entries have been recorded.

An unadjusted trial balance includes only revenue accounts, while an adjusted trial balance includes only expense accounts.

An unadjusted trial balance lists accounts in alphabetical order, while an adjusted trial balance lists them by account number.

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Verified step by step guidance

Step 1: Understand the concept of a trial balance. A trial balance is a list of all ledger accounts and their balances at a specific point in time. It is used to ensure that total debits equal total credits in the accounting system.

Step 2: Differentiate between an unadjusted trial balance and an adjusted trial balance. An unadjusted trial balance is prepared before any adjusting entries are made, while an adjusted trial balance is prepared after all adjusting entries have been recorded to reflect accurate account balances.

Step 3: Recognize the purpose of adjusting entries. Adjusting entries are made to account for accrued revenues, accrued expenses, prepaid expenses, depreciation, and other items that ensure the financial statements comply with the accrual basis of accounting.

Step 4: Note the differences in usage. The unadjusted trial balance is typically an intermediate step in the accounting process, while the adjusted trial balance is used to prepare accurate financial statements.

Step 5: Eliminate incorrect options. For example, the unadjusted trial balance does not list accounts alphabetically, nor does it include only revenue accounts. The adjusted trial balance includes all accounts after adjustments, not just expense accounts.