What is the Difference Between Ledger and Trial Balance?


Difference Between Ledger and Trial Balance

Although ledger and trial balance are both integral parts of the same accounting cycle, there is still a considerable difference between ledger and trial balance. They both have their respective relevance and timing in the business cycle. In short, a ledger is an account wise summary of all monetary transactions, whereas a trial balance is the debit and credit balance of such ledger accounts.

Traditionally a ledger was prepared in a physical book with a separate page for each account and a trial balance was derived from these accounts. In the modern days, all the data is stored in ERPs with the help of computers.

 

Ledger Vs Trial Balance in Table Format

Ledger Trial Balance
A ledger is an account wise summary of all monetary transactions maintained in a classified form. It is a statement of debit and credit balances that are extracted from ledger accounts at a specified time.
It is also known as the principal book of accounts and book of final entry. There is no formal synonym of a trial balance, however, it is informally referred to as TB.
Ledger acts as a foundation to create a trial balance for the business. Trial balance acts as a foundation to create financial statements for the business.
It is essentially a summarized form of all journal entries. It is essentially a summarized form of all ledger accounts.
Details of what is a ledger and a sample format are also provided here. Details of what is a trial balance and a sample format are also provided here.
There are different types of ledgers such as Debtor’s ledger, Creditor’s ledger, General ledger, etc. There are no subtypes of a trial balance. An adjusted trial balance is made to fix partial & improper transactions.

 

Stage Within an Accounting Cycle.

Ledger – It is prepared after recording journal entries, consequently, it acts as a support to prepare the trial balance.

Trial Balance – It is the next step after adjusting and closing the ledger accounts, therefore acting as the groundwork for the preparation of financial statements.

Difference between a Ledger and Trial Balance in the Accounting Cycle

 

>Read Difference Between Journal Entry and Journal Posting



 

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