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Trail Balance vs Balance Sheet

In simple terms, a balance sheet is an extension of the accounts recorded in the trial balance. When you’re beginning to learn balance sheet,
you will be given a trial balance and would be asked to prepare a format of balance sheet using the accounts mentioned in the trial balance.

Basically, the trial balance is an internal document. And balance sheet is prepared to disclose the financial affairs of the company to external
stakeholders.

Trial Balance Balance Sheet


Inherent Meaning Trial Balance is created to record all Balance sheet is created to see whether the assets equal
The balances of ledger account Liability plus equity
Application Trial Balance is used to see whether the Balance sheet is used to show the accuracy of financial
Total of debit balance is equal to credit balances affairs of a company
Is it a financial stmt No Yes
Division Every account is divided between debit and credit Every accounts is divided among assest,liabilities and
balances shareholders’ equity
Used for Internal Purpose External Purpose
Recorded when? Recorded Monthly,Quarter,HalfYear,Yearly End of Financial Year
Sources General Ledger Trail Balance
Signature Auditor not required to sign Auditor required to sign
Rule of Thumb No thumb rule Assets, Liability and shareholders’ equity should be arranged
in proper order
Part of Financial Account Not a part of Financial Account Part of Financial Account

Trail Balance

The trial balance is the sum-total of all the end balances that are directly taken from the ledger accounts to see whether the total of debit and
the total of credit are equal or not.
If debit balances don’t match with credit balances, then the accountant needs to investigate whether there’s any error in recording or not.

Debit and Credit:


Simple Rule for Debit and Credit:

 Debit the account when the assets/expenses increase and the liabilities/revenues decrease.
 Credit the account when the assets/expenses decrease and the liabilities/revenues increase.

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