Balance Sheet Vs Trial Balance
Balance Sheet
1. It is a statement that shows a detailed listing of assets, liabilities, and capital demonstrating the financial condition of a company on a given date.
2. The purpose of preparing a balance sheet is to show the financial position of a business.
3. A balance sheet is mandatory to be prepared by law and to complete the accounting cycle.
4. Closing stock is shown on the balance sheet as an asset.
5. A balance sheet is mainly divided into two heads: Assets and Liabilities.
6. It accommodates only personal and real accounts, nominal accounts are not included.
7. A balance sheet can only be made when all accrual entries (prepaid and outstanding) have been adjusted.
Related Topic – What is Balance B\F and Balance C\F?
Trial Balance
1. It is a statement of debit and credit balances that are extracted from ledger accounts on a specific date.
2. The purpose of preparing a trial balance is to ascertain the accuracy of the books of accounts.
3. A trial balance is not mandatory to be prepared according to the law.
4. .Closing stock is not usually shown in the trial balance.
5. A trial balance is divided into two-column heads: Debit and Credit.
6. It accommodates all accounts: real, personal and nominal.
7. A trial balance can be prepared without making any adjustments.
The above-mentioned differences between Balance Sheet and Trial Balance are related to their purpose, format, content, stage in accounting, exceptions, etc.
Short Quiz for Self-Evaluation
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