Difference between Trial Balance and Balance Sheet - QS Study
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Difference between Trial Balance and Balance Sheet

Trial balance is an account which shows debit balances and credit balances of all accounts in the ledger. It is a statement of all debits and credits in a double-entry account book, with any disagreement signifying a fault. Balance Sheet is a tabular report of balances carried further after closing the books of account reserved according to principles of accounting. It is a statement arranged with a view to determine the financial situation of a business on a definite fixed date.

Trial balance

  • Objective: To know the arithmetical accuracy of the accounting work.
  • Format: The columns are debit balances and credit balances.
  • Content: It is a summary of all the ledger balances – personal, real and nominal accounts.
  • Stage: It is the middle stage in the preparation of accounts.
  • Period: It can be prepared periodically, say at the end of the month, quarterly or half yearly, etc.
  • Preparation: It is prepared before the preparation of trading, profit and loss account.
  • Stock: It shows opening stock only.
  • Order: Balances shown in the trial balance are not in order.
  • Evidence: It cannot be produced as documentary evidence in the court.
  • Compulsion: Preparation of trial balance is not compulsory.

Balance Sheet

  • Objective: To know the true and fair financial position of a business.
  • Format: The two sides are assets and liabilities.
  • Content: It is a statement showing closing balances of personal & real accounts.
  • Stage: It is the last stage in the preparation of accounts.
  • Period: It is generally prepared at the end of the accounting period.
  • Preparation: It is prepared after the preparation of trading, profit and loss account.
  • Stock: It shows closing stock only.
  • Order: Balances shown in the balance sheet must be in order.
  • Evidence: It can be produced as documentary evidence.
  • Compulsion: Preparation of the balance sheet is a must.