What is an unadjusted trial balance?

An unadjusted trial balance is a pivotal accounting tool that lists the balances of all the general ledger accounts before any year-end adjustments have been made. This balanced statement serves to ensure that the total debits equal total credits, reflecting the basic principle of double-entry accounting.

By providing a snapshot of account balances, it allows accountants to identify any discrepancies or errors in the recording of transactions prior to adjustments for accruals, deferrals, and other necessary corrections. This process is essential for preparing for the next steps in the accounting cycle, which includes creating financial statements and making the necessary adjustments to the balances.

In contrast, an adjusted trial balance would only include account balances after all adjustments, thus providing a more accurate depiction of a company’s financial position. Other options in the question do not accurately define what an unadjusted trial balance entails, as they pertain to different aspects of accounting practices.