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.
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 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.