What are the three types of trial balances? (2024)

FAQs

What are the three types of trial balances? ›

What are the three trial balances? There are three types of trial balance: the unadjusted trial balance, the adjusted trial balance, and the post-closing trial balance. Each is used at different stages in the accounting cycle.

Purpose of a Trial Balance

To determine the ledger account balances. It serves as evidence that the double entry system has complied duly. It facilitates the preparation of the financial statements.

A trial balance is a statement showing the balances or total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts.

The correct answer is Statement. A trial balance is a financial statement that shows the current closing balances of all accounts in the general ledger.

There are three methods by which you can prepare a Trial Balance. They are as follows: Total Method – Total Method records each ledger account's debit and credit columns to the Trial Balance. Both the columns should be equal as this method follows the double-entry bookkeeping method.

To identify errors: Preparing a trial balance can help identify errors in the accounting system, such as recording transactions in the wrong account or incorrect amounts. If the total debits and credits do not match, it indicates an error somewhere in the accounting system.

Accountants use a trial balance to test the equality of their debits and credits. A trial balance is a listing of the ledger accounts and their debit or credit balances to determine that debits equal credits in the recording process.

What is the major difference between the unadjusted trial balance and the adjusted trial balance? ›

The unadjusted trial balance is created before adjusting entries are made, while the adjusted trial balance is created afterward. The adjusted trial balance includes adjustments for revenues and expenses that have been incurred but are not yet recorded in the accounts, while the unadjusted trial balance does not.

Account balances vary based on the type of account and the financial institution. Common types include checking, savings, credit card, and investment account balances.

But due to some clerical error done while doing the accounting, there are chances that trial balance will not agree. In such case, the difference in trial balance is transferred to a temporary account named as "suspense a/c".