Question

Distinguish between a balance sheet and trial balance.

Answer 1

The differences between balance sheet and trial balance are

$\begin{array}{ccc}\text{Basis}& \text{Trial Balance}& \text{Balance Sheet}\\ \text{Object}& \text{It is prepared to check the arithmetical accuracy of}& \text{It is prepared to know the true financial}\\ & \text{the books of accounts.}& \text{position of the firm.}\\ \text{Contents}& \text{All the ledger accounts are shown in the trial balance.}& \text{The balances of only those ledger accounts}\\ & & \text{which have not been closed till the preparation}\\ & & \text{of trading and profit and loss account are}\\ & & \text{shown in the balance sheet.}\\ \text{Headings}& \text{The headings of its two columns are debit and credit.}& \text{The headings of its two sides are assets, and}\\ & & \text{capital and liabilities.}\\ \text{Closing Stock}& \text{Normally, a closing stock does not appear in the trial balance.}& \text{Closing stock appears in the balance sheet.}\\ \text{Period}& \text{Normally, it is prepared every month and whenever desired.}& \text{Normally, it is prepared only at the end of the trading period.}\\ \text{Accounts}& \text{All accounts must be mentioned in the trial balance.}& \text{Only real and personal accounts appear in balance sheet.}\\ \text{Necessity}& \text{Though desirable. its preparation is not necessary.}& \text{It is necessary to prepare a balance sheet.}\end{array}$