What is the Difference Between Balance Sheet and Trial Balance?

Balance Sheet Vs Trial Balance

Balance Sheet

1. It is a statement that shows a detailed listing of assets, liabilities, and capital demonstrating the financial condition of a company on a given date.

2. The purpose of preparing a balance sheet is to show the financial position of a business.

3. A balance sheet is mandatory to be prepared by law and to complete the accounting cycle.

4. Closing stock is shown on the balance sheet as an asset.

5. A balance sheet is mainly divided into two heads: Assets and Liabilities.

6. It accommodates only personal and real accounts, nominal accounts are not included.

7. A balance sheet can only be made when all accrual entries (prepaid and outstanding) have been adjusted.

Related Topic – What is Balance B\F and Balance C\F?

Trial Balance

1. It is a statement of debit and credit balances that are extracted from ledger accounts on a specific date.

2. The purpose of preparing a trial balance is to ascertain the accuracy of the books of accounts.

3. A trial balance is not mandatory to be prepared according to the law.

4. .Closing stock is not usually shown in the trial balance.

5. A trial balance is divided into two-column heads: Debit and Credit.

6. It accommodates all accounts: real, personal and nominal.

7. A trial balance can be prepared without making any adjustments.

The above-mentioned differences between Balance Sheet and Trial Balance are related to their purpose, format, content, stage in accounting, exceptions, etc.

Short Quiz for Self-Evaluation

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