The Balance Sheet is the last financial statement that is prepared by any organization. This statement helps to ascertain the true financial position of an enterprise at the end of an accounting period. It is a statement that is prepared to ascertain the values of assets and liabilities of a business on a particular date. The Main Differences between Balance Sheet and Trial Balance are discussed below
Difference between Balance Sheet and Trial Balance
The given below are points of distinction between the Balance Sheet and Trial Balance.
| Basis of Difference | Balance Sheet | Trial Balance |
|---|---|---|
| Motive | It represents the financial position at the end of an accounting year. | It represents the arithmetical accuracy of the accounts prepared in the ledgers. |
| Nature of Accounts | Real & personal account balances and net profit or loss are considered to prepare this statement. | Real, nominal, and personal account balances are considered to prepare this. |
| Financial Statement | It is one of the financial statements prepared by an organization. | It is not a financial statement. |
| Duration | It is generally prepared yearly at the end of an accounting period. | It can be prepared for any period as per the need of the management such as monthly, quarterly, or half-yearly. |
| Sequence | It is prepared after preparing Trading and Profit & Loss Account. | It is prepared before preparing Trading and Profit and Loss Account. Rather, the Trading and Profit and Loss Account is prepared with the help of the Trial Balance. |
| Heads | It has two heads namely, Assets and Liabilities. Liabilities are shown on the left-hand side and assets are shown on the right-hand side. | It has two sides namely, Debit Side and Credit Side. The debit side is shown on the left-hand side and the Credit side is shown on the right-hand side. |
| Closing Stock | Closing stock is shown in the Balance Sheet. | Generally, Closing stock is not shown in the Trial Balance. It is given outside the Balance Sheet. |
| Opening Stock | Opening Stock is not shown in the Balance Sheet. | Opening Stock is shown in the Trial Balance. |
| Essential | This statement is essential to be prepared. | Trial Balance is not essential to be prepared. |
| Accounts | It is prepared with the help of Trial Balance | It is prepared with the help of the balances of all ledger accounts. |
Also, Read
Trading Account
Trading Account is an account that is prepared to ascertain the trading results of a firm in form of gross profit earned or gross loss incurred during an accounting period.
Users of Financial Statements
The users of financial statements can be broadly classified as Internal Users and External Users. Internal Users are the users who have direct access to the financial statements
Financial Statements
Financial statements reveal the profitability and financial position of a business at the end of the accounting year. It provides financial information to various accounting users that
What is a Promissory Note?
A promissory note is an unconditional promise in writing given by the buyer (or creditor) to the seller (or debtor) to pay the amount of money specified therein to the seller or to the order of seller or to bearer.