Unadjusted Trial Balance: Example and Common Errors
An unadjusted trial balance is a list of a company’s general ledger accounts and their ending balances, prepared after journal entries are posted but before period-end adjusting entries. Total debits should equal total credits. Equal totals confirm the math, not that every transaction was recorded correctly. Adjusting entries then produce the adjusted trial balance.
Why it matters: This checkpoint helps students locate recording and posting errors before moving to adjustments. It also organizes the account balances that later support financial reporting.
Watch the lesson
Watch the trial-balance definition, format, and error-checking segment (0:02–4:25).
Watch this Farhat lesson on YouTube.
Want a full lesson with more practice? The Trial Balance and Debt Ratio lesson in the Financial Accounting course includes an exercise on preparing a trial balance with a missing value.
What does an unadjusted trial balance show?
A trial balance is an internal accounting schedule, not a financial statement. It lists account titles and their balances at a specific date. Debit balances go in one column and credit balances in another. The word “unadjusted” tells you when the schedule is prepared: after posting, but before period-end adjusting entries. It does not mean the balances are wrong. It means some of them may still need updating.
Quick vocabulary check: the general ledger is the complete set of a company’s accounts. Posting means transferring each journal entry’s amounts into those ledger accounts. Adjusting entries are end-of-period entries that update balances, such as recording insurance that has expired, so revenues and expenses land in the correct period.
The preparation sequence is analysis, journalizing, posting, and then the trial balance. The journalizing and posting example explains how the underlying accounts are built. If an entry uses the wrong account, returning to transaction analysis is more useful than repeatedly adding the columns.
According to the IRS overview of double-entry bookkeeping, total debits must equal total credits after journal entries are posted to the ledger. OpenStax’s trial-balance lesson shows how final ledger balances move onto the schedule.
How to prepare an unadjusted trial balance
| Step | What to do |
|---|---|
| 1. Finish posting | Confirm that each recorded journal entry has reached every affected ledger account. |
| 2. Calculate balances | Net each account’s debit and credit postings, including its opening balance. |
| 3. List the accounts | Follow the chart-of-accounts order: assets, liabilities, equity, dividends, revenues, and expenses. |
| 4. Place each balance | Use the debit column for an actual debit balance and the credit column for an actual credit balance. |
| 5. Total and investigate | Add both columns. If they differ, trace the difference without inserting an unsupported amount. |
Use the company’s name, the schedule name, and an as-of date in the heading. A zero-balance account may be omitted or displayed without an amount, depending on the format. Do not enter an account’s gross debit activity in one column and gross credit activity in the other: the schedule uses its net ending balance.
Unadjusted trial balance example: Meridian
Hypothetical example. Meridian Design Studio Inc. starts with zero balances in May 20X7. After posting the transactions in the connected journal tutorial, its ledger contains the balances below. The example excludes income taxes and period-end adjustments. All amounts are U.S. dollars. Retained Earnings does not appear because May is Meridian’s first month, so its beginning balance is zero. An established company would list its beginning Retained Earnings balance with the other equity accounts.
| Account | Debit | Credit |
|---|---|---|
| Cash | $21,000 | — |
| Accounts Receivable | $2,000 | — |
| Supplies | $1,200 | — |
| Prepaid Insurance | $1,800 | — |
| Equipment | $9,000 | — |
| Notes Payable | — | $6,000 |
| Accounts Payable | — | $500 |
| Unearned Service Revenue | — | $2,400 |
| Common Stock | — | $24,000 |
| Dividends | $400 | — |
| Service Revenue | — | $5,000 |
| Rent Expense | $900 | — |
| Salaries and Wages Expense | $1,600 | — |
| Total | $37,900 | $37,900 |
Cash equals $29,400 of receipts less $8,400 of payments, or $21,000. Accounts Receivable equals $3,000 billed less $1,000 collected, or $2,000. Accounts Payable equals $1,200 purchased on account less $700 paid, or $500. These are ending balances, not new journal entries.
Total debit balances and credit balances both equal $37,900. This amount is not total assets or net income. It combines different account categories for a bookkeeping check. Dividends and expenses appear on the debit side even though they are not assets.
Errors a balanced trial balance can miss
| Error | Do totals still agree? | Why |
|---|---|---|
| Omit an entire $450 cash service transaction | Yes | Neither the debit nor the credit is recorded. |
| Post both sides of a $900 rent entry twice | Yes | Debits and credits are overstated equally. |
| Debit Supplies instead of Equipment for a $700 cash purchase | Yes | The amount and side balance, but the account classification is wrong. |
| Record a $640 transaction as $460 on both sides | Yes | Both sides use the same incorrect amount. |
| Omit only a $300 debit posting while keeping its credit | No | The two sides no longer have equal totals. |
Different mistakes can also offset one another. For that reason, a balanced trial balance is evidence of mathematical equality only. Review source documents, entry dates, account classifications, and completeness. A computer’s balanced-entry control helps with arithmetic but cannot decide whether the business event was understood correctly.
What if the debit and credit totals differ?
First add the columns again and compare each listed balance with the ledger. Then recalculate the ledger balances and trace entries back to the journal. Look for a missing account, a posting on the wrong side, or a copied amount that differs from the original. Never force agreement by putting the unexplained difference into Cash or another account.
For example, if a $250 debit balance is mistakenly listed as a credit, debits fall $250 while credits rise $250. The resulting difference is $500. This illustrates why an imbalance can be twice the amount of the underlying error. A handy shortcut: divide the difference by 2 and look for a balance of that amount sitting in the wrong column. Here, $500 ÷ 2 = $250.
If the difference divides evenly by 9, check for a transposition, where two digits are swapped on one side only. For example, if a $640 debit is posted as $460 while its $640 credit is posted correctly, the columns differ by $180, and $180 ÷ 9 = 20. A slide, such as posting $250 as $25, also creates a difference divisible by 9 ($225 ÷ 9 = 25).
Such patterns are clues; they do not replace inspection of the records.
Trial balance versus balance sheet
The trial balance includes revenue, expense, and dividend accounts alongside assets, liabilities, and equity. A balance sheet presents financial position using assets, liabilities, and equity. Its columns and subtotals serve a different purpose.
Unadjusted vs. Adjusted vs. Post-Closing Trial Balance
An unadjusted trial balance is prepared before period-end adjusting entries. An adjusted trial balance is prepared after those entries are posted, and it is the one used to prepare the financial statements. A post-closing trial balance comes last, after closing entries, and lists only permanent accounts.
| Unadjusted trial balance | Adjusted trial balance | Post-closing trial balance | |
|---|---|---|---|
| When it’s prepared | After regular journal entries are posted, before adjusting entries | After adjusting entries are posted | After closing entries are posted |
| Accounts listed | Every account with a balance: assets, liabilities, equity, dividends, revenues, and expenses | The same accounts with updated balances, plus any accounts the adjustments create, such as Depreciation Expense | Permanent accounts only: assets, liabilities, and equity |
| Main purpose | Check debit-credit equality and spot balances that need adjusting | Serve as the source for the financial statements | Confirm the books are ready for the next period |
Think of Meridian’s Prepaid Insurance ($1,800) and Supplies ($1,200). If some insurance coverage expired or some supplies were used during May, those balances will change once adjusting entries are recorded. Equal unadjusted totals don’t remove the need for that review. Calculating the adjustments is outside this lesson.
For the final step in the cycle, see the post-closing trial balance guide.
Key Takeaways
- An unadjusted trial balance lists each ledger account’s ending balance after posting and before adjusting entries.
- Debit balances go in the left column and credit balances in the right. The two totals should match.
- Equal totals prove the math, not that every entry is correct or complete.
- Omitted, duplicated, misclassified, or equally misstated entries can all hide inside a balanced trial balance.
- Financial statements are prepared from the adjusted trial balance, not the unadjusted one.
- If the totals differ, trace the difference. Never plug it into Cash or another account.
Unadjusted Trial Balance: Interactive Exercise
Ready to test yourself? These eight questions cover trial balance preparation, account order, debit and credit columns, and what a trial balance can and can’t prove. Pick an answer from each drop-down menu, then select Check answers.
Review: Trial balance definition, purposes, and preparation
What is a trial balance?
A trial balance is a list of accounts and their balances at a given time. A company usually prepares it at the end of an accounting period, such as the end of the month.
How are accounts and balances arranged?
Accounts appear in the same order as in the ledger. Debit balances are listed in the left column, and credit balances are listed in the right column. The totals of the two columns must agree.
What are the purposes of a trial balance?
A trial balance proves the mathematical equality of debits and credits after posting to the ledger. Under the double-entry system, this equality occurs when the sum of debit account balances equals the sum of credit account balances. A trial balance can help uncover some journalizing and posting errors and provides a starting point for financial-statement preparation. Equal totals do not prove that transactions are complete, correctly classified, or recorded at the correct amounts.
What are the steps in preparing a trial balance?
- List the account titles and their balances.
- Total the debit and credit columns.
- Prove the equality of the two columns.
Practice questions with answers
Try each question before reading its answer.
1. Cash has debit postings of $8,500 and credit postings of $3,200, with a zero opening balance. What belongs on the trial balance?
Answer: A $5,300 debit balance. Subtract credits from debits; do not list both gross totals as the account balance.
2. A complete $600 cash-revenue entry is omitted. Will the trial balance necessarily fail to balance?
Answer: No. Both Cash and Service Revenue are understated by $600, so the columns can remain equal even though the records are incomplete.
3. Debit balances total $18,700. Known credit balances total $15,900, and one verified credit-balance account is missing. What is its balance?
Answer: $2,800 credit: $18,700 − $15,900. This calculation works because the question establishes that only this account is missing and the other balances are correct. It is not permission to insert a balancing figure into real records.
Frequently asked questions
Is an unadjusted trial balance a balance sheet?
No. It is a debit-credit schedule of ledger balances. A balance sheet is a financial statement presenting assets, liabilities, and equity.
Should expenses be removed before preparing the trial balance?
No. Include their actual balances. Expenses, revenues, and dividends are temporary accounts, which means they are reset to zero through closing entries at the end of the period. That happens later in the accounting cycle, after the adjusted trial balance.
Does a credit balance always belong to a liability?
No. Revenue, common stock, and retained earnings normally have credit balances too, and so do contra-asset accounts such as Accumulated Depreciation. Use the account’s identity and actual balance, not the word credit alone.
What is the difference between an unadjusted and an adjusted trial balance?
Timing. The unadjusted trial balance is prepared before period-end adjusting entries, and the adjusted trial balance is prepared after them. The adjusted version is the one used to prepare financial statements.
Can you prepare financial statements from an unadjusted trial balance?
You shouldn’t. Its balances don’t yet reflect period-end adjustments such as expired insurance or supplies used, so revenues, expenses, assets, and liabilities could be misstated. Use the adjusted trial balance instead.
When is an unadjusted trial balance prepared?
Usually at the end of an accounting period, such as a month, quarter, or year, after all regular journal entries have been posted. A company can also prepare one at any time to check that debits equal credits.
What does an abnormal balance mean on a trial balance?
An abnormal balance is one on the opposite side from the account’s normal balance, such as Cash with a credit balance. It often signals a posting error, although a credit balance in Cash can also mean the bank account is overdrawn. Investigate it before moving on.
Learning scope: Intermediate Accounting, Section 2.2, Analyze and Record Business Transactions. This lesson ends before period-end adjusting entries.
About the Author
Mansour Farhat, CPA, CIA, DBA, teaches accounting through Farhat Lectures, where he creates courses and exam preparation for CPA, CMA, and EA candidates and accounting students. Read more about Professor Farhat.
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