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

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

The adjusted trial balance includes the effects of adjusting entries, while the unadjusted trial balance does not.

The unadjusted trial balance is used to prepare financial statements, while the adjusted trial balance is not.

The adjusted trial balance only lists revenue and expense accounts, while the unadjusted trial balance lists all accounts.

The unadjusted trial balance is prepared after closing entries, while the adjusted trial balance is prepared before closing entries.

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Verified step by step guidance

Understand the purpose 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.

Recognize the unadjusted trial balance: The unadjusted trial balance is prepared before any adjusting entries are made. It reflects the initial balances of accounts before considering accruals, deferrals, or other adjustments required for accurate financial reporting.

Identify the adjusted trial balance: The adjusted trial balance is prepared after adjusting entries have been recorded. Adjusting entries are made to account for items such as accrued revenues, accrued expenses, prepaid expenses, and depreciation, ensuring compliance with the accrual basis of accounting.

Compare the two trial balances: The major difference is that the adjusted trial balance includes the effects of adjusting entries, while the unadjusted trial balance does not. Adjusting entries are necessary to ensure that the financial statements reflect the true financial position and performance of the entity.

Clarify the timing and usage: The unadjusted trial balance is prepared before adjusting entries and is used as a preliminary check. The adjusted trial balance is prepared after adjustments and is used to prepare accurate financial statements. Neither trial balance is prepared after closing entries; closing entries are made after the adjusted trial balance is finalized.