This paper presents an improved flowing material balance method for unconventional gas reservoirs. The flowing material balance method is widely used to estimate geological reserves. However, in the case of the unconventional gas reservoirs, such as coalbed methane reservoirs and shale gas reservoirs, the conventional method is inapplicable due to the gas adsorption on the organic pore surface. In this study, a material balance equation considering adsorption phase volume is presented and a new total compressibility is defined. A pseudo-gas reservoir is simulated and the results were compared with the existing formulations. The results show that the proposed formulation can accurately get the geological reserves of adsorbed gas reservoirs. Furthermore, the results also show that the volume of the adsorbed phase has a significant influence on the analysis, and it can only be ignored when the Langmuir volume is negligible.