What is an unadjusted trial balance?

An unadjusted trial balance is a compilation of ledger account balances before any adjustments are made. It serves as a preliminary step in the accounting cycle and provides a snapshot of the company's financial position at a particular point in time. This document lists all account balances, both debits and credits, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Having this unadjusted trial balance is crucial for identifying any discrepancies in the accounts that may need to be addressed before preparing financial statements. Adjustments could arise from accrued expenses, unearned revenues, or depreciation, among others. Therefore, the unadjusted trial balance acts as a foundation for the subsequent adjustments that align the accounts with the accrual basis of accounting.

The other options do not accurately describe an unadjusted trial balance. A list of income and expenses pertains specifically to an income statement, not a trial balance. A summary of the budget refers to a projection of future financial performance, while a financial statement prepared after all transactions suggests completion of the accounting cycle, which occurs later in the process after adjusting entries have been made.