What is an Adjusted Trial Balance?

Adjusted Trial Balance

Share This...

Adjusted Trial Balance

An adjusted trial balance is a financial report that lists all the general ledger accounts along with their balances after accounting for all adjusting entries at the end of an accounting period. The adjusted trial balance serves as a basis for preparing the financial statements, such as the income statement, balance sheet, and statement of cash flows.

The adjusted trial balance ensures that the total debits and credits in the general ledger are equal after all adjusting entries have been recorded. Adjusting entries typically include accruals, deferrals, and estimates to accurately reflect the financial position of the company at the end of the accounting period.

Example of an Adjusted Trial Balance

Here is an example of a company’s adjusted trial balance at the end of the accounting period:

Account NameDebitCredit
Accounts Receivable20,000
Prepaid Insurance6,000
Office Equipment15,000
Accumulated Depreciation – Office Equipment3,000
Accounts Payable10,000
Salaries Payable5,000
Unearned Revenue4,000
Notes Payable12,000
Common Stock35,000
Retained Earnings15,000
Sales Revenue85,000
Cost of Goods Sold40,000
Insurance Expense2,000
Salaries Expense25,000
Rent Expense8,000
Depreciation Expense3,000
Interest Expense1,000

In this example, all the general ledger accounts and their respective balances have been adjusted, and the debits and credits are equal, ensuring that the financial statements can be accurately prepared. Adjusting entries have been made for items such as prepaid insurance, depreciation, and salaries payable to ensure that the financial position of the company at the end of the accounting period is accurately reflected.

Other Posts You'll Like...

Want to Pass as Fast as Possible?

(and avoid failing sections?)

Watch one of our free "Study Hacks" trainings for a free walkthrough of the SuperfastCPA study methods that have helped so many candidates pass their sections faster and avoid failing scores...