Difference Between General Ledger And Trial Balance

Here we will study about the some of the main differences between General Ledger And Trial Balance.

1. Ledger is the Primary, Main or King of Books of Accounts where all the accounts are posted from Journal or Book in classified form for the accounting period but Trial Balance shows Arithmetic Accuracy of the Balances of Accounts shown on Debit and Credit side and helpful in finding mistakes and errors & frauds in order to rectify these mistakes, errors and frauds later on. So, it is the book of final entry i.e., all the closing balances of different kinds of accounts are transferred to ledger in a classified and separate form. Examples are Accounts Receivable Ledger, Accounts Payable Ledger, Sales Ledger, Purchases Ledger, etc., while a Trial Balance shows the arithmetic accuracy of closing balances of different accounts by showing debit accounts lists with credit accounts lists for the period.

2. A Ledger shows the Business Transactions and Balance of An Account separately while Trial Balance shows all the Balances of all the Accounts whether Permanent or Temporary Accounts Transferred from the Ledger of each Account and totals of these Balances in one place in order to show arithmetical accuracy of Books of Accounts for the accounting period.

3. A Ledger is the 3^rd Step of Accounting Cycle so it comes first while Trial Balance is the 4^th Step of Accounting Cycle, so it the next phase of the Steps in the Accounting Cycle.

4. Ledger helps us in the preparation of Trial Balance while errors made in Ledger is analysed and identified through equality of Debit And Credit Balances.

Check Out Also, “Difference Between General Journal And General Ledger”

5. There are possibilities where Trial Balance shows that both Debits and Credit Sides are agree but there are some hidden and secret mistakes and errors that it fails to reveal. These errors and mistakes are identified through Books of Original Entry (Journal) And Books of Final Entry (Ledger). For Example, completely omission of a Business Transaction, Cash Sales wrongly recorded as Credit Sales, etc.

You Can Also Read Out, “What is The Difference Between Debit And Credit”

Relationship & Similarities Between General Ledger And Trial Balance

1. Both Ledger and Trail Balance are presented to the internal management only unless it is necessary to disclose to others i.e., in case of Frauds or Sue, if it is required by law.

2. Both are important steps of Accounting Cycle as any error, mistake or frauds in ledger or in trial balance can be detected and rectified with the help of these books of accounts. For Example, in case of error of principle, If Capital Expenditure is Treated As Revenue Expenditure and wise versa, then eventhough the trial balance will agree but it can be detected by preparing revise ledger of both capital and revenue expenditure accounts on the basis business transaction recorded from Journal.

So, Ledger is the Book of Final Entry and helps in the preparation of Trial Balance while Trial Balance shows the Arithmetic Accuracy of the Ledger by showing the Equality of Debit And Credit Balances Transferred from the Ledgers of Different Types / kinds of Accounts.