It is a summary of the business activities that occurred in an accounting period wherein the business activities are shown through different ledgers. This article has been a guide to General Ledger vs.
Trial Balance. Here we discuss the top differences between the general ledger and trial balance along with infographics and comparison table.
You may also have a look at the following articles —. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Free Accounting Course. Login details for this Free course will be emailed to you. Forgot Password? Article by Madhuri Thakur. Difference Between General Ledger and Trial Balance The primary difference between general ledger and trial balance is that general ledger prepared by the company is the set of the different master accounts in which the detailed transactions of the business are present having all the accounts, whereas, the trial balance of the company has only the ending balance present in those accounts of the company.
The ledger provides a complete record of accounting transactions Accounting Transactions Accounting Transactions are business activities which have a direct monetary effect on the finances of a Company. The information in general ledgers is collected from journals, which is the primary book of accounts. It includes debit and credit entries of transactions. It is generally separated as a different asset class Different Asset Class Assets are classified into various classes based on their type, purpose, or the basis of return or markets.
Fixed assets, equity equity investments, equity-linked savings schemes , real estate, commodities gold, silver, bronze , cash and cash equivalents, derivatives equity, bonds, debt , and alternative investments such as hedge funds and bitcoins are examples. All the amounts related to the respective business are posted from the journal. The ledger may be prepared for any time frame as and when required by the Organization, be it a Fiscal year Fiscal Year Fiscal Year FY is referred to as a period lasting for twelve months and is used for budgeting, account keeping and all the other financial reporting for industries.
Some of the most commonly used Fiscal Years by businesses all over the world are: 1st January to 31st December, 1st April to 31st March, 1st July to 30th June and 1st October to 30th September read more or Calendar year. Assets, liabilities , equity , income and expenses. Individual asset accounts such as cash, accounts receivables , prepayments , etc. For large scale businesses where many transactions are conducted, it may not be convenient to enter all transactions in the general ledger due to the high volume.
The trial balance is a summarized worksheet which includes all ledger balances as at a particular point of time usually the accounting year-end with the intention of checking the mathematical accuracy of the ledger balances. All the debit balances will be recorded in one column with all the credit balances in another.
Trial balance provides all the ending balances in a single document at a glance, therefore, it is easy to use as a reference tool. It also assists in disclosing a number of possible errors in case of occurrence and helps to identify the type of journal entries that should be posted in order to correct the identified errors.
If all the transactions for an accounting period are accurately recorded, the sum of the debit balances of the trial balance should be equal to the sum of the credit balances. Certain type of errors in the general ledger can be identified through the trial balance. They are,. If the debit side of the trial balance exceeds the credit side, then the difference is credited to the suspense account and if the credit balance is greater than the debit balance, the difference is debited to the suspense account.
Once the errors are identified, rectified and the trial balance tallied, the suspense account is closed since the balance no longer exists. While the process of accounting used to be very time-consuming and costly, it can be now performed with less time and effort with the use of automated accounting software.
One of those accounts is General Ledger and Trial Balance which is widely used in every company to reconcile and close the books of accounts at the end of each period. In this article, today, we will try and understand the difference between General Ledger vs Trial Balance and their nature and working.
In older times, the ledger was prepared physically and was done manually for each account, but with time it has evolved in electronic form, and now all data is stored in ERP portals. Both are an integral part of accounting thought and serves as a lifeline of every accountant. This has been a guide to General Ledger vs Trial Balance.
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