Difference Between Trial Balance And Balance Sheet
The main dissimilarities or difference between trial balance and balance sheet can be pointed out as follows:
1. Meaning
Trial Balance: It is a statement of debit and credit balances of books of account or ledgers.
Balance Sheet: It is a statement of all assets, liabilities, and equity at a particular period.
2. Objectives
Trial Balance: To ensure the arithmetical accuracy of business transactions posted on ledger accounts.
Balance Sheet: To check assets and liabilities position and financial strength of the business.
3. Preparation
Trial Balance: It is prepared after posting financial transactions in ledger accounts.
Balance Sheet: It is prepared after preparing trading account and profit and loss account for the specific period.
4. Standards
Trial Balance: It is prepared without any specific format or standards.
Balance Sheet: It follows specific standard and format.
5. Usage
Trial Balance: It is for internal use only/
Balance Sheet: It is prepared for both internal and external purpose.
6. Periodicity
Trial Balance: Can be prepared at anytime according to the need of the business firm(monthly, quarterly, half-yearly, or annually).
Balance Sheet: It is prepared at the end of the accounting period only.
7. Component Of Financial Statement
Trial Balance: It is not a component of financial statement.
Balance Sheet: It is the most important component or part of the financial statement.
8. Account Division
Trial Balance: Debit balance and credit balance.
Balance Sheet: Assets and liabilities
Also Read:
Also Read:
9. Stock Consideration
Trial Balance: It considers opening stock.
Balance Sheet: It considers closing stick.
10 Concept Followed
Trial Balance: It follows the concept of dual accounting i.e debit = credit.
Balance Sheet: It follows the concept of "Total Assets = Total liabilities + Equity".
Trial Balance Vs Balance Sheet (Comparison Chart)
I hope this post is helpful to understand the difference between trial balance and balance sheet and to make comparison between them.
Trial Balance Vs Balance Sheet (Comparison Chart)
Basis For Difference
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Trial Balance
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Balance Sheet
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Introduction
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Statement that records all debit and credit balances of ledger
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Statement that records assets, liabilities and capital of the firm
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Purpose
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To ensure the accuracy of books of accounts
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To reveal the financial position of the firm
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Preparation
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After preparing ledger accounts
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After preparing trading and profit and loss A/C
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Fixed Standards And Format
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No
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Yes
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Usage
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Internal use
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Both internal and external use
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Preparation Time
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Any time
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At the end of the accounting period
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Component Of Financial Statement
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No
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Yes
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Account Division
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Debit and credit
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Assets and liabilities
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Stock Consideration
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Opening stock
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Closing stock
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I hope this post is helpful to understand the difference between trial balance and balance sheet and to make comparison between them.
