Trial Balance and Balance Sheet

The balance sheet is one of the major sectors of the nucleus of financial statements. It is specially issued for in-house use but is also intended by outsiders such as investors and lenders. The balance sheet is used to summarize the liabilities, assets, and shareholder’s equity in a company. It is usually accounted for, at the end of each month. It is properly constructed in the form of accounting standards which are set by the accepted accounting principles. The trial balance on the other hand is accounting software that sorts the finished balance of each account. The report of the trial balance is generally used by the auditor of the company as a source of the document. 

Multiple Uses of Trial Balance

There are various uses of a trial balance in an accounting system. It has a great significance in the financial statements altogether. One of the major uses of a trial balance is to verify the total amount of the debit side is equal to the total amount on the credit side. It helps to have a proper balance of credit altogether. It is also used for maintaining a working trial balance which helps the auditor do adjustments in various entries. It is further used to maintain a balance sheet as well as an income statement which helps to maintain an overall accounting system altogether. One of the major use of a trial balance is that it helps the auditor to obtain the final balance at the end of each account. 

Difference Between Trial Balance and Balance Sheet

The major sectors of difference between a trial balance and balance sheet are as follows:

Standards

The balance sheet is a much more structured format and has the inclusion of various accounting standards in it which helps the balance sheet to be a structured accounting statement. While on the other hand in the case of the trial balance there is no such mentioned mandated format and no sort of accounting standards are being used in the trial balance altogether. 

Aggregation

The balance sheet is used for the aggregation of multiple accounts at different sectors of accounting while on the other hand, the trial balance presents various information at each level of accounting which makes it a more detailed and structured accounting standard. The auditors using the trial balance find it way easier to achieve derailed information through it. 

Reporting level

The balance sheet having information about different sectors of accounting is eventually a final report to the accounts which are mentioned in it, while on the other hand, the trial balance is used for the construction of different sorts of reports altogether. 

Usage 

The balance sheet is generally used for external uses and does not have the inclusion of internal accounts through it. While on the other hand, the trial balance is generally used by the auditors and the accounting departments. Lastly, one of the differences between a trial balance and a balance sheet is that a trial balance is generally used for the recording of every ending balance of each account after a certain period; while on the other hand, a balance sheet is used for aggregating the ending balance of every line of accounts and different accounting standards.

Conclusion

The primary purpose of creating a trial balance and a balance sheet is to search out any errors which can be mentioned in this accounting standard. A trial balance and the balance sheet both are a huge sector of the accounting system and have different importance in their field which makes it very important for maintaining accounting standards.