Adjusted Trial Balance

An Unadjusted Trial Balance is a balance of entries that have been implemented over an extended period of time without any adjustments being made. For example, the unadjusted trial balance above shows what the company has on file for each account. However, there were several entries that were not added to the accounts, therefore, making this an unadjusted trial balance.

Adjustment Entries

These entries are then used to make the necessary adjustments to the proper accounts to finalize the unadjusted trial balance to an Adjusted Trial Balance.

Current and Non-Current Assets and Liabilities

Through my course of college, I have been working on Financing, Accounting, and other fun facts that I did not clearly understand before. Now that I have understood the basic and more complex topics of Financing and Accounting I thought I would share some of this general knowledge by starting with Current and Non-Current Assets and Liabilities. Below are some examples of these and an explanation as to why they are in such category.

• Finished goods inventory – Current asset, will be sold and converted to cash with a year

• Raw materials -  Current Asset, will be converted to finished goods with a year

• Bank loan with a repayment date three years from today – non-current liability – 3 years

• Bank loan with a repayment date six months from today – current liability – due with a year

• Outstanding receivables from products sold – current asset- will be converted to cash within a year

• Depreciation expense – profit and loss statement, expenses go on the P&L (Profit & Loss)

• Salary expense for employees – profit and loss statement, expenses go on the P&L

• Interest expense (payable to bank for loans) – profit and loss statement, expenses go on the P&L

• Money owed to a supplier for raw materials purchased – current liability, to be paid with a year

• Dividends to be paid to shareholders two months from today – current liability, to be paid with a year

• Retained earnings – equity by definition

• Shareholder’s paid-in capital – equity by definition

• Machinery and equipment – non-current asset, lasts more than a year

• Accrued salaries and related expenses such as payroll taxes – profit and loss statement, expenses go on the P&L

• Income tax to be paid to the US government one month from today – current liability, to be paid with a year

• Cash and cash equivalents – current asset, by definition

• Building – non-current asset, lasts more than a year

• Goodwill – non-current asset- lasts more than a year

• Bonds payable to be paid in 15 months non-current liability – greater than a year