Trial Balance: From Unadjusted to Adjusted
Learn how a trial balance works, how adjusting entries create an adjusted trial balance, and which accounting errors balanced columns cannot reveal.
Quick answer
A trial balance is a list of general-ledger accounts and their debit or credit balances at a point in the accounting cycle. Its immediate test is mathematical: total debits should equal total credits. An adjusted trial balance performs the same test after period-end adjusting entries have been posted, and those adjusted balances become the starting point for the financial statements.
What a trial balance tells you
It is a bridge between ledger activity and reporting, not a financial statement. The debit and credit columns can expose an out-of-balance posting before amounts reach the statements.
Equal totals do not prove the records are correct. An omitted transaction or equal amounts posted to the wrong accounts can leave the trial balance in balance.
Worked example: adjusting supplies before reporting
- 1The unadjusted Supplies balance is $4,000, and a year-end count shows $1,000 remains. Supplies used equals $4,000 minus $1,000, or $3,000.
- 2Debit Supplies Expense and credit Supplies for $3,000. The entry transfers the used amount from the asset to period expense without changing debit-credit equality.
- 3The adjusted trial balance now reports Supplies of $1,000 and Supplies Expense of $3,000. Carry those amounts to the balance sheet and income statement respectively.
| Step | Calculation | Result |
|---|---|---|
| Supplies available before adjustment | Given unadjusted balance | $4,000 |
| Supplies still on hand | Physical count at year-end | $1,000 |
| Supplies used | $4,000 - $1,000 | $3,000 |
| Event | Account | Debit | Credit |
|---|---|---|---|
| Year-end adjustment | Supplies Expense | $3,000 | |
| Year-end adjustment | Supplies | $3,000 |
| Account | Unadjusted balance | Adjustment | Adjusted balance | Reported in |
|---|---|---|---|---|
| Supplies | $4,000 debit | $3,000 credit | $1,000 debit | Balance sheet |
| Supplies Expense | $0 | $3,000 debit | $3,000 debit | Income statement |
Practice the CPA topics covered on this page
Practice CPA exam questions and use your results to find the topics that need more work.
Find My Weak AreasHow the three trial balances fit together
The unadjusted trial balance contains ordinary ledger balances before period-end adjustments. Review it with supporting schedules for accruals, deferrals, estimates, and corrections. The broader timing framework remains with Accrual Accounting.
After posting the adjustments, prepare the adjusted trial balance and then the financial statements. Detailed deferred-revenue mechanics remain with Deferred Revenue.
Closing entries reduce temporary accounts to zero. The post-closing trial balance contains permanent balance-sheet accounts only.
- 1UnadjustedBefore period-end adjustments, collect the starting general-ledger balances.
- 2Post adjustmentsRecord accruals, deferrals, estimates, and corrections supported by the period-end facts.
- 3AdjustedUse the adjusted balances to prepare the financial statements.
- 4Post-closingAfter temporary accounts close, confirm debit-credit equality for permanent accounts.
Errors the debit-credit test can and cannot find
A one-sided posting, unequal entry, or debit placed in the credit column can make the columns differ. A difference divisible by nine can suggest transposed digits, while twice an account balance can suggest a debit-credit reversal.
Complete omission, equal posting to incorrect accounts, duplication, and equal wrong amounts can preserve equality. Source documents, reconciliations, and account analysis must address those risks.
Do not confuse the trial balance with the underlying ledger system. The new General Ledger Vs Subsidiary Ledger guide explains how control accounts and detailed schedules reconcile. This page owns the sequence and debit-credit test, while the ledger page owns where summarized and customer-level balances are maintained.
| Usually makes totals unequal | Can remain hidden while totals agree |
|---|---|
| One-sided posting | Complete omission of a transaction |
| Unequal debit and credit amounts | Equal amounts posted to the wrong accounts |
| Debit placed in the credit column | Duplicate entry or equal wrong amount on both sides |
Apply the sequence on FAR questions
- Identify the trial-balance stage supplied and the stage requested.
- Calculate each adjustment, record its debit and credit, and recompute the affected balances before choosing a financial statement.
- Use CPA exam blueprints and FAR study guide for scope and section planning. Consolidations, cash-to-accrual conversion, and other entry families keep their own pages.
- Practice at free FAR practice and label each miss as a stage, entry-direction, calculation, or statement-placement error.
Frequently asked questions
What is the difference between a trial balance and an adjusted trial balance?
A trial balance lists general-ledger balances before period-end adjustments. An adjusted trial balance is prepared after entries for accruals, deferrals, estimates, and corrections have been posted. The adjusted version supplies the balances used to prepare the financial statements.
Does a balanced trial balance prove the accounting records are correct?
No. Equal debit and credit totals show that recorded debits equal recorded credits. They do not reveal an omitted transaction, an entry posted to the wrong accounts for equal amounts, or an incorrect amount entered on both sides.
What happens after the adjusted trial balance?
The adjusted balances are used to prepare the financial statements. Closing entries then transfer temporary revenue, expense, and distribution balances into retained earnings, after which a post-closing trial balance confirms the remaining permanent-account balances.
Sources
- 2026 Uniform CPA Examination Blueprints (retrieved 2026-08-11)
- FASB Accounting Standards Codification (retrieved 2026-08-11)
- SEC Beginners' Guide to Financial Statements (retrieved 2026-08-11)