The balance sheet requires the authorization of an auditor. Source General ledgers act as a source or basis of the formation of the trial balance. Trial balance acts as a basis or source during the making of a balance sheet. Application Trial balance is taken into use for ensuring if the totals of all the debit balances are equal to the totals of all the credit balances. The balance sheet is taken into use for evaluating the financial position of an organization as well as depicting the accuracy of all its financial affairs.
Recurrence The trial balance is made as a particular date and that could be the ending of a specific month, quarter, half-year, and year. A balance sheet is made at the end of each and every financial year.
Thumb Rule There is absolutely no thumb rule with respect to the arrangement of ledger balances. Trial balance ignores opening stock and includes closing stock whereas balance sheet includes opening stock but excludes closing stock. Trial balances are neither a part of final accounts nor a part of financial statements whereas a balance sheet is a part of both financial statements and final accounts.
This has been a guide to the top difference between Trial Balance vs Balance Sheet. Here we also discuss the Trial Balance vs Balance Sheet key differences with infographics and comparison table. You may also have a look at the following articles to learn more-.
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The general ledger is comprised of all the individual accounts needed to record the assets , liabilities , equity , revenue , expense , gain , and loss transactions of a business. The trial balance is a report run at the end of an accounting period , listing the ending balance in each general ledger account.
The report is primarily used to ensure that the total of all debits equals the total of all credits, which means that there are no unbalanced journal entries in the accounting system that would make it impossible to generate accurate financial statements.
There are a number of differences between the general ledger and trial balance, which are as follows:. Amount of information. The general ledger contains the detailed transactions comprising all accounts , while the trial balance only contains the ending balance in each of those accounts. Thus, the general ledger may be several hundred pages long, while the trial balance covers only a few pages. The general ledger is used as the main source of information by financial accountants when they are investigating accounts.
The trial balance has a much more limited use, where the totals of all debits and credits are compared to verify that the books are in balance. The report is only used within the accounting department and as a source document by a company's auditors. This report has multiple uses:. To verify that the total dollar amount of debits equals the total dollar amount of credits.
For use in constructing a working trial balance that includes adjusting entries. For use in constructing a balance sheet and income statement , if there is no accounting software to do so automatically.
For use by auditors to obtain the ending balances in accounts. Thus, the differences between a trial balance and balance sheet are as follows:. The balance sheet aggregates multiple accounts, while the trial balance presents information at the account level and is therefore more detailed. The balance sheet is structured in accordance with specific accounting standards, while there is no mandated format for a trial balance.
The balance sheet is intended for external use, while the trial balance is for use within the accounting department and by auditors.
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