If you’ve ever taken a peek behind the curtain of bookkeeping, you’ve probably heard the phrase “trial balance.” And if you’ve gotten a little further into the process, you might have come across the term “adjusted trial balance.”
It may sound technical, but don’t worry—it’s actually a straightforward concept, and it plays a huge role in keeping your financial reports accurate. Let’s break it down.
What Is a Trial Balance?
A trial balance is simply a list of all your accounts and their balances at a given point in time. It’s used to check that your books are mathematically correct by making sure total debits equal total credits.
Think of it as a quick checkup for your books. If something doesn’t balance, you know there’s an error som
So, What’s an Adjusted Trial Balance?
The adjusted trial balance is created after you make end-of-period adjustments to your books. These adjustments capture transactions that haven’t yet been recorded but should be—things like:
- Accrued expenses: bills you owe but haven’t paid yet.
- Accrued revenues: money earned but not yet invoiced.
- Depreciation: spreading out the cost of long-term assets (like equipment).
- Prepaid expenses: like insurance you paid upfront but are “using up” over time.
The adjusted trial balance is essentially the updated version of your trial balance—clean, accurate, and ready to generate reliable financial statements.
Why Does It Matter?
You might be thinking, “Why not skip straight to financial statements?” Here’s why the adjusted trial balance matters:
- Accuracy – It ensures all your transactions—including adjustments—are included.
- Compliance – Proper adjustments keep you aligned with accounting standards.
- Decision-Making – Without adjustments, your financial reports might paint a false picture of your business.
- Tax Prep – Having adjusted balances means fewer headaches when filing taxes.
A Simple Example
Let’s say you prepay $1,200 for insurance to cover 12 months. At the end of the first month, you’ve used $100 worth of insurance.
- On your unadjusted trial balance, the full $1,200 might still show as an asset.
- After adjustment, you move $100 into insurance expense and leave $1,100 as prepaid insurance.
Now your books accurately reflect what you’ve used and what’s left.
Final Thought
The adjusted trial balance is the bridge between your day-to-day bookkeeping and the final financial statements your business depends on. Skipping it means risking errors in the reports you use to make decisions and file taxes.
At Accredited Bookkeeping we make sure your books are not just balanced, but adjusted and accurate—so you can trust the numbers you see.
How Accredited Bookkeeping Can Support Your Business
At Accredited Bookkeeping, we understand the challenges small businesses face when it comes to managing finances. We’re here to help you streamline your bookkeeping processes, avoid unnecessary financial errors, and gain greater clarity about your financial health. Our services are designed to fit the specific needs of your business, giving you peace of mind while you focus on growth.
Contact us today for a free consultation and discover how we can make bookkeeping easier for you.
📧 marianne@accreditedbookkeeping.com
Marianne Kirwan
📞 352-626-0116
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