Categories: Accounting

What are key differences between Trial Balance and Balance sheet?

Trial balance is a part of accounting process which is a list of debit and credit balances taken from all the ledger accounts. The trial balance may be prepared on daily or weekly or monthly or at the end of the accounting period to check the arithmetical accuracy in recording and posting .The periodicity of preparing trial balance is as per the requirement of the organization. The trial balance will have debits and credits columns. The summary of debit balances and credit balances shall be equal in the trial balance. This is because every debit has a corresponding credit and if posted methodically then the total of both the columns would be equal.

The key differences between Trial Balance and balance sheet are that the Trail balance is only the list of all balances of General Ledger Account whereas the Balance sheet is the statement which shows the assets, equity and liabilities of an entity. Simply opening stock   is considered in Trial Balance whereas only closing stock is considered in the balance sheet. Trial Balance is used only for internal use whereas   Balance Sheet is used both for internal and external uses i.e. to inform the stake holders and outside parties about the financial condition of the entity. Trial balance can be taken any number of times in a year according to requirements of the organization. Balance sheet is prepared on a particular date normally at the end of a financial year to ascertain the financial position of the entity as of a particular date. The preparation of Trial Balance is not prerequisite at all, but the preparation of Balance Sheet is obligatory for every company.

Surendra Naik

Share
Published by
Surendra Naik

Recent Posts

Features of a Computerized Accounting System

A computerized accounting system is a software application that automates financial records and reporting processes…

15 hours ago

What is the meaning of computerized accounting?

As the name says ‘computerised accounting’ is the use of computers, software, and hardware to…

2 days ago

Supreme Court overrules capping of Credit card charges

The Supreme Court today overruled a 2008 decision by the National Consumer Disputes Redressal Commission…

3 days ago

Preparation and Presentation of Financial Statements of Banks

The Bank’s financial statements are prepared under the historical cost convention, on the accrual basis…

3 days ago

Accounting Treatment of Specific Items under accounting policies of banks

The term "accounting treatment" represents the prescribed manner or method in which an accountant records…

3 days ago

Explained: Disclosures Prescribed by RBI under Basel-III

The Basel Committee on Banking Supervision (BCBS) is the primary global standard setter for the…

4 days ago