Difference between the Trial Balance and Balance Sheet

Differences between Trial balance and balance sheet

Difference between the Trial Balance and Balance Sheet:-

Trial Balance shows the total closing balance of all the ledger accounts for the specific period i.e. for a month, for a quarter, for a six month, and for a whole year. In the double entry accounting system, there is always the same amount of the Credit corresponding to every Debit. So, the total of both column(Debit & Credit) of the trial balance is always equal, if not then there is an error in the posting of the transactions.

The Balance sheet is the statement showing the financial position of the business in the particular accounting period. It is a list of balances of ledger account of assets, capital and liabilities. The value of assets shows which we can realize from the market and The value of Liabilities shows which we have to pay in future. Capital shows the amount invested by the owner into the business entity. it is the basis on the following account equation.

Assets = Capital + Liabilities

 

Chart of Difference between the Trial Balance and Balance Sheet: –

Basis of Difference

Trial Balance

Balance Sheet

Meaning
Trial Balance showing the equality of both column i.e. Debit and Credit. Balance Sheet showing the financial position of an entity.
Object 
It is prepared to authenticate the arithmetical accuracy of recording and posting of all business transaction. It is prepared to show the true or fair financial position of an entity.
Accounts Included 
It includes all type of accounts. i.e. Real, Personal and Nominal accounts It includes only two type of accounts. i.e. Real and  Personal accounts
Net Profit/ Loss
Trail balance does not contain any information about Net profit/loss. Balance Sheet does provide information about net Profit/loss for the year under the head of capital.
Dependency
The trial balance is dependent on the ledger account and subsidiary books not on the balance sheet. The balance sheet is prepared from the trial balance but it also can be prepared from ledger accounts.
Necessity
The trial balance is summary of all ledger account balance. It is not necessary to prepare by any act or law. We have prepared it to simplify our process of preparing Financial Statements. The balance sheet is necessary to prepare by law.
Classification of Accounts
In trial Balance, all accounts are classified into two categories the accounts with the debit balance and the accounts with the Credit balance. In Balance Sheet, only personal and real accounts are classified into the balance of assets, liabilities and capital.
Time of Preparation 
It is prepared before preparation of Financial Statements. It is prepared after preparing trading and Profit&Loss account.
Effect of Adjusted entries 
The trial balance is prepared before any adjustments. The Balance sheet is prepared after all adjustments.
Name of heading
Debit balance and Credit Balance Assets and Liabilities(In horizontal form)
Information about Stock or inventories 
In the trial balance, Information is provided only for opening stock. In the Balance Sheet, Information is provided only for cLosing stock.
Uses
It has internal use only. It has internal as well as external use.
Financial Statements 
The trial balance is not a part of the financial statement but it is the base of financial statements. The balance sheet is the part of financial statements.

If you want to Download the chart please download the following image: –

Chart of Differences between the Trial Balance and Balance Sheet 258x300 - Difference between the Trial Balance and Balance Sheet
Chart of Differences between the Trial Balance and Balance Sheet

 

application pdf - Difference between the Trial Balance and Balance Sheet
Chart of Difference between the Trial Balance and Balance Sheet – PDF

 

 

 

The conclusion of Difference Between the Trial Balance and Balance Sheet: –

There is much difference between these two statements. The trial balance is prepared to check the error in the process of accounting but the balance sheet is prepared to show the true financial position of an entity.

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