Page 108 - Office Practice and Accounting 10

Differences between trial balance and balance sheet

Trial Balance Balance Sheet
1. Trial balance columns are headed 1. Balance sheet columns are headed
by Dr. and Cr. by Liabilities and Assets.
2. It is a codified summary of all 2. It is a statement showing closing
ledger balances-personal, real and balances of personal and real
nominal. accounts.
3. It is the first step in the final 3. It is the last step in the final
account. account.
4. It establishes the arithmetical 4. It reveals the true and financial
accuracy of the accounting. position.
5. Trial balance is prepared monthly, 5. Balance sheet is prepared normally
quarterly, half yearly, yearly, etc. only once a year.
6. Trial balance is not accepted by the 6. Balance sheet is accepted by the
court as evidence. court as documentary evidence.
7. To complete the accounting cycle, 7. To complete an accounting cycle,
trial balance is not necessarily balance sheet is essential.
prepared. 8. The arrangement of assets and
8. There is no order as to the liabilities are made in order of
arrangement of ledger balance in liquidity or permanency.
a trial balance.

Similarities between Trial Balance and Balance Sheet

1. Trial balance and balance sheet both are statement but not account.
2. Both are prepared on a particular date.
3. Both of these statements are prepared on the basis of ledger balances.
4. Both of these statements should be balanced to ensure the accuracy of the books
of accounts.
5. ‘To’ and ‘By’ is avoided in both statements.
6. Both of these can be prepared either in ‘T’ format of vertical format.

102 Office Practice and Accounting 10