What is the Difference Between Trial Balance and Adjusted Trial Balance?

The main difference between a trial balance and an adjusted trial balance lies in the adjustments made for accruals, deferrals, and estimated amounts. Here are the key differences between the two:

Preparation: A trial balance is prepared initially, followed by the adjusted trial balance. The trial balance is created before adjusting entries are made, while the adjusted trial balance is created afterward.
Content: A trial balance is a list of ledger account closing balances at a specific point in time. In contrast, an adjusted trial balance includes accumulated expenditure, accrued income, prepayment, and depreciation. Entries in an adjusted trial balance are made for accruals of expenses, prepayments, and depreciation.
Purpose: The main purpose of a trial balance is to ensure that the total of all debit balances matches the total of all credit balances in a double-entry accounting system. The adjusted trial balance is used to prepare financial statements and more accurately reflect the financial position and performance of a business.
Accounting Entries: Adjusted trial balances include entries for accruals and deferrals, as well as estimated amounts. For example, adjusting entries record depreciation and amortization for the period, record an allowance for doubtful accounts, record a reserve for obsolete inventory, record a reserve for product returns, and record any accrued revenue or expenses. These adjustments are not included in the trial balance.

In summary, a trial balance is a list of ledger account closing balances, while an adjusted trial balance includes adjustments made for accruals, deferrals, and estimated amounts. The adjusted trial balance is used to prepare financial statements and more accurately reflect the financial position and performance of a business.

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What is the Difference Between Trial Balance and Adjusted Trial Balance?

Comparative Table: Trial Balance vs Adjusted Trial Balance

Here is a table that highlights the differences between a trial balance and an adjusted trial balance:

Feature	Trial Balance	Adjusted Trial Balance
Definition	A trial balance is a list of a company's accounts and their balances at a specific point in time. It is a summary of an organization's transactions.	An adjusted trial balance is a list of a company's accounts and their balances after adjusting entries have been made. It reflects accrued expenses, prepayments, and depreciation.
Purpose	The purpose of a trial balance is to ensure that the accounting records are accurate and complete. It helps identify any errors in the accounting process.	The purpose of an adjusted trial balance is to ensure that the financial statements are accurate. It updates the account balances to reflect any adjustments made since the last day of the accounting period.
Adjustments	A trial balance does not include adjustments for accrued expenses, prepayments, and depreciation.	An adjusted trial balance includes adjustments for accrued expenses, prepayments, and depreciation, among others.
Preparation	The trial balance is typically prepared first, before the adjusted trial balance.	The adjusted trial balance is prepared after the trial balance, once all necessary adjustments have been made.
Financial Statements	The trial balance is used to prepare financial statements, but it may not provide a complete picture of the company's financial position.	The adjusted trial balance is used to prepare financial statements and provides a more accurate and comprehensive view of the company's financial position.

In summary, a trial balance is a summary of a company's transactions, while an adjusted trial balance reflects the adjustments made to account for accrued expenses, prepayments, and depreciation. The adjusted trial balance is used to prepare more accurate financial statements, while the trial balance is a tool for identifying errors in the accounting process.

Guilherme Mazui

Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.