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Lesson 1: Course Orientation and Review of Accounting Cycle
Unadjusted Trial Balance Preparation
The unadjusted trial balance lists all of the general ledger accounts and the respective balances of each of the accounts, and is typically prepared at the end of each accounting period, typically monthly. The balances of each account in the general ledger are typically used as a source in preparing the trial balance.
The trial balance lists accounts in the order in which they appear in the ledger. All asset accounts are normally listed first, followed by liability, equity, dividends, revenue, and expense accounts. The primary purpose of the trial balance is to ensure the mathematical equality of debits and credits after posting has been completed. A trial balance can also help detect errors in journalizing and posting. Also, it assists in the preparation of financial statements. The trial balance does not, however, prove that a company has recorded all transactions or that the general ledger is correct.
| Unadjusted Trial Balance | ||
|---|---|---|
| Account | Debit | Credit |
| Cash | $82,100 |
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|
| Accounts Receivable | 8,000 |
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|
| Supplies | 4,000 |
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|
| Prepaid Insurance | 2,400 |
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|
| Truck | 20,000 |
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|
| Equipment | 50,000 |
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|
| Account Payable |
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| $2,000 |
| Notes Payable |
-
| 40,000 |
| Unearned Revenue |
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| 10,000 |
| Common Stock |
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| 100,000 |
| Revenue |
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| 15,000 |
| Utilities Expense | 500 | |
|
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| $167,000 | $167,000 |