The trial balance is an internal document—it stays in the accounting department. It is a listing of all of the accounts in the general ledger (balance sheet accounts and income statement accounts) and their respective balances as of a specified point in time, such as June 30, 2006. The purpose of the trial balance is to document that the total amount of account balances with debit balances is equal to the total of amount of account balances with credit balances.

The balance sheet is a financial statement that reports the dollar amounts of assets, liabilities, and stockholders’ equity at a specified point, such as June 30, 2006. Since it is a financial statement, it will be distributed outside of the accounting department. As a result, it should be prepared in accordance with generally accepted accounting principles. (Often the balance sheet accounts in the general ledger are summarized and combined so that the resulting balance sheet is only 20 – 30 lines in length.)

Learn more about the Balance Sheet.

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

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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