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July 9, 2008

What is the difference between a trial balance and a balance sheet?

A trial balance is an internal report that will remain in the accounting department. It is a listing of all of the accounts in the general ledger and their balances. However, the debit balances are entered in one column and the credit balances are entered in another column. Each column is then summed to prove that the total of the debit balances is equal to the total of the credit balances.

A balance sheet is one of the financial statements that will be distributed outside of the accounting department and is often distributed outside of the company. The balance sheet is organized into sections or classifications such as current assets, long-term investments, property, plant and equipment, other assets, current liabilities, long-term liabilities, and stockholders’ equity. Only the asset, liability, and stockholders’ equity account balances from the general ledger or from the trial balance are then presented in the appropriate section of the balance sheet. Totals are also provided for each section to assist the reader of the balance sheet. The balance sheet is also referred to as the statement of financial position or the statement of financial condition.

Learn more about the Balance Sheet.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

10 Responses to “What is the difference between a trial balance and a balance sheet?”

  1. harinarthini on July 13th, 2008 10:37 am

    wonder website , i hope the terminology will be increased.

  2. George on August 7th, 2008 8:22 am

    I feel explanation of the trial balance could have gone further covering its purpose ie. checking on arithematic errors and the completion of double entry system.

  3. Vicky on September 10th, 2008 2:20 pm

    It’s a good website, but it needs to be increased ,for us to learn more. This is because the differentiations are very few and doesn’t include alot of the information that we know already.We need more please!

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  9. mohsin on August 16th, 2009 3:42 pm

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  10. adetutu on January 28th, 2010 8:51 am

    The agreement of a trial balance is a necessary and sufficient condition to assume the correctness of the balances – Discuss

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