Adjusted Trial Balance Vs Post Closing Trial Balance

Adjusted Trial Balance

Adjusted Trial balance is the trial balance that is generated after the adjusting entries have been recorded into the accounting system. It is the trial balance use to prepare the financial statement. It usually is prepared at the end of the accounting period.

Unadjusted trial balance is the sum of all transactions which happen in the accounting period. For balance sheet accounts, they will include the beginning balance as well. The unadjusted trial balance needs to reflect with some adjustments to become an adjusted trial balance. The adjustments include accrued expenses, accrued revenue, depreciation.

Adjusted Trial Balance Example

Accounts Unadjusted TB Adjustment Adjusted TB
Cash              5,000             5,000
Accounts Receivable            15,000          2,000           17,000
Inventory            30,000           30,000
Fixed Asset          120,000         120,000
Accounts Payable            (5,000)           (5,000)
Accrued Liabilities            (2,000)        (1,000)           (3,000)
Long term debt          (14,000)         (14,000)
Retained Earnings        (100,000)       (100,000)
Share Capital          (50,000)         (50,000)
Revenue          (40,000)        (2,000)         (42,000)
Cost of Goods Sold            20,000           20,000
Payroll            10,000           10,000
Depreciation Expense              3,000             3,000
Rental Expense              2,000             2,000
Utility Expense              3,000             3,000
Admin Expense              1,000          1,000             2,000
Other Expense              2,000             2,000

Post-Closing Trial Balance

The post-closing trial balance is the trial balance of all balance sheet account that is generated at the end of the accounting period. This trial balance is the balance of accounts that need to carry forward to the next accounting period. They are not including the income statement accounts because those accounts are already reflected in the retained earnings account (equity) in the closing process. The income statement accounts are temporary accounts so they are not supposed to bring to the next period. Only the permanence accounts are transferred to the new accounting cycle.

The total balance of post-closing trial balance should be zero, the debit must equal to credit side. If it is not zero, there must be some mistakes at any point in the process. The balance on post-closing trial balance is the final figure in the accounting period, there is no other adjustments are allowed to record into the system. It will help to ensure that the balance will not change after financial statements are prepared. Management usually closing the balance in accounting software, so the accountants will not be able to record other transactions after the period close.

Example of Post-Closing Trial Balance

Accounts Balance
Cash             5,000
Accounts Receivable           17,000
Inventory           30,000
Fixed Asset         120,000
Accounts Payable           (5,000)
Accrued Liabilities           (3,000)
Long term debt         (14,000)
Retained Earnings       (100,000)
Share Capital         (50,000)