suresh Explanation of difference between trial balance and balance sheet for Accounts category interview question
When discussing financial statements, it is important to understand the difference between a trial balance and a balance sheet.
Trial Balance:
A trial balance is a list of all the general ledger accounts of a company and their respective balances. It serves as a preliminary step in the financial accounting process to ensure that debits equal credits.
Balance Sheet:
A balance sheet, on the other hand, is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It consists of assets, liabilities, and equity, and follows the accounting equation: Assets = Liabilities + Equity.
In summary, while a trial balance is a working document that helps ensure accuracy in accounting records, a balance sheet presents a company's overall financial health and position.
Understanding the difference between these two financial statements is crucial for assessing the financial performance and stability of a company.
Please login or Register to submit your answer