What is Trial Balance?
Trial Balance is a statement which accounts all the balances of the Personal account, Real account and Nominal account regardless of either Revenue or Capital A/c. It comprises of 2 columns viz., debit and credit. If the transactions are documented systematically by providing dual sided effect and later posted methodically, then the sum total of both the columns would be similar.
What is Balance Sheet?
A Balance Sheet is a statement which shows the liabilities, assets and shareholder’s equity of the enterprise. This statement comprises of 2 major groups in which it is categorised, namely, assets, which is classified into Non – Current Assets and Current assets. Current Assets are such assets which are easily transformed into cash. On the other hand, the Non – Current Assets are such types of assets with the assistance of which the enterprise operates the enterprise.
Also Read: Trial Balance Example
This article is a ready reckoner for all the students to learn the difference between Trial Balance and Balance Sheet :
|Basis||Trial Balance||Balance Sheet|
|Meaning||Trial Balance is a statement which accounts all the balances of the Personal account, Real account and Nominal account regardless of either Revenue or Capital A/c||A Balance Sheet is a statement which shows the liabilities, assets and shareholder’s equity of the enterprise. This statement comprises of 2 major heads in which it is categorised :One is assets, which is classified into Non – Current Assets and Current assets|
|Stock||Opening stock is contemplated||Closing stock is contemplated|
|Division||Debit and Credit||Assets and Liabilities|
|Part of Financial Statement||No||Yes|
|Balance||Nominal, Real and Personal account are shown||Real and personal account are shown|
|Objectives||To monitor the arithmetical accuracy is documenting and posting the data||To determine the financial position of the enterprise on a specific date|
|Use||Internal use||External use|
|Preparation||During the closure of each month, quarter, half year or financial year||During the closure of the financial year|
The above mentioned is the concept, that is elucidated in detail about ‘Difference between Trial Balance and Balance Sheet’ for the Commerce students. To know more, stay tuned to BYJU’S.
Frequently Asked Questions on Trial Balance and Balance Sheet
Is trial balance and balance sheet same?
Trial Balance is a part of the accounting process, that shows the debit and credit balances received from the ledger accounts. Whereas, the Balance Sheet is the statement that shows the company’s financial status by reviewing the capital, liabilities, and assets on a particular date.
What is the purpose of preparing a trial balance?
A trial balance is prepared to identify any numerical errors that may have taken place in the double-entry accounting system.
Why is balance sheet important?
It is important to prepare a balance sheet as it gives an insights to the investors about the company’s financial status.
What are the items that a balance sheet should include?
A balance sheet generally includes Assets and Liabilities. Asset example: marketable securities, account, prepaid expenses, inventory, fixed assets,inventory, assets, and cash,etc. Liabilities example: accrued liabilities, account payable, short-term debt, customer prepayment, taxes payable, and long-term debt, etc.
Why is the trial balance called “trial balance”?
Trial Balance is known as “trial balance” because it is the primary step taken towards preparing the Financial Statements of a company.