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What types of errors are NOT revealed by a trial balance? What types of errors ARE revealed by a trial balance? How is the trial balance used to prepare financial statements? How do you locate the difference when a trial balance does not balance? Why do assets and expenses have debit balances while income, liabilities, and capital have credit balances? How do accruals and prepayments affect the figures taken to the financial statements from the trial balance? What is the effect of depreciation on the trial balance and statements? What is the difference between a trial balance error being 'in the trial balance' versus 'in the ledger'? What is an extended trial balance (ETB)? How does closing inventory appear in relation to the trial balance?
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What is the difference between a trial balance and a balance sheet?

Intermediate

Answer

A trial balance is an internal list of all ledger balances (income, expenses, assets, liabilities, capital) used to check the books and prepare the accounts. A balance sheet is a formal financial statement showing only assets, liabilities, and capital at a date. The trial balance includes income/expense accounts; the balance sheet does not.
Real-world example Sales and purchases appear in the trial balance but not on the balance sheet, which shows only financial position.

Common follow-ups: Which includes income and expenses? | Which is a formal statement for users?

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All 25 Trial Balance questions