![]() This was more important in the days before computers and automatic calculations, but it's still important to help check for errors. It shows the mathematical accuracy of the ledger. Auditors use it for this purpose, to trace balances back to their individual transactions.Īccountants use the trial balance less often. You can use it to look back at every purchase and sale. The general ledger is the primary source of information for people in the accounting department. UseĪccountants and auditors use both the general ledger and the trial balance in their roles. Rather than a repository for all the data, it takes everything in the general ledger and condenses it to give just the important facts and figures to help you see if your accounts balance. You can reference this database to get the most specific details about any transaction. Think of it as a database of all your financial happenings. In the general ledger, there's a list of every transaction from every account for the entire calendar or fiscal year. It contains just the totals for each category. In contrast, the trial balance is much shorter. It contains every transaction in all the individual accounts, like assets and equity. The general ledger is more detailed than the trial balance. Though both the general ledger and the trial balance record and reference the expenses and income of a company, they differ in many important ways, including: Amount of information Read more: What Is a Trial balance? How To Prepare a Trial Balance (With Examples) General ledger vs. Post-closing trial balance: This is the final trial balance that's prepared before a new accounting period starts. ![]() Unadjusted trial balance: This is the listing of general ledger account balances at the end of the reporting period.Īdjusted trial balance: This is the internal document that summarizes the current balances of the general ledger. There are three types of trial balance, including: This is an internal document used for accounting and auditing. The trial balance helps create an accurate financial statement. Debits are the amount of money a company brings in, and credits are the amount of money spent. In an ideal situation, the total debits and credits match and have a balance of zero. Read more: What Is a General Ledger? Definition, Function and Parts of a General Ledger What is a trial balance?Ī trial balance is a report that shows the ending balance in each general ledger account. Loss: This is a decrease in a company's overall income that comes from something other than its normal business operations.Įquity: This is the difference between liabilities and assets on the company's balance sheet. Gain: This is an increase in a company's overall income that comes from something other than its normal business operations. Revenue: This is the total amount of income made from the sale of goods or services.Įxpense: This is the cost a company incurs to operate a business and generate revenue. Liabilities: These are past transactions, sales or exchanges of assets that are currently unpaid and provide economic benefits for the future. The groupings within the ledger show individual accounts that record:Īssets: These are resources with economic value that can benefit the company in the future. It's a record of all the financial activity within the business. The general ledger is a set of all accounts that show the transactions within a company or organization. In this article, we discuss what the general ledger and the trial balance are and explore the differences between them. Understanding the differences between the two can help you better prepare your documents and reports. For business and accounting professionals, it's important to know how to use of the general ledger and the trial balance.
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